Goal-Oriented Investing: 3 Tips for Market Newbies
"We didn't have one phone call over the last three days related to markets going down," he says, "and that tells me that we are positioning [GoalMine] in the right way."
San Francisco-based GoalMine, which launched nine months ago, is an online investing platform aimed at small investors who have very specific money goals, such as saving for tuition or a big event, like a wedding or vacation. With social-sharing tools, including the ability to receive or give a $25 donation over Facebook or buy an investment gift card, the site aims to help individuals raise investment funds through many different channels. Launched quietly last November, GoalMine hopes to capture a mid-income demographic that's underserved by bigger retail investors focused on six-digit clients.
"Our whole product is premised on [the idea] that, regardless of income or financial literacy, you can invest," Malhotra says. "We will never ask you questions you don't know the answer to." GoalMine's fees amount to 1% of the portfolio, annualized.
Three Tips for New Investors
1. Step into the market slowly: "The worst thing that new investors can do is go all in at once," Malhotra says. "No matter what amount you have earmarked, step into the market. Don't go all in." He says to start with a portion of your earmarked funds. For example, if you want to invest $5,000 total, start with $1,000 as an initial investment, and then drizzle in the rest, putting in, say, $500 monthly untilo you reach your goal. The strategy helps smooth out market volatility.
2. Stick to your plan: Whether your goal is to grow $2,000 for a holiday vacation or $20,000 for a wedding in 2013, don't get sidetracked. Consistency is most important, Malhotra says. "You have to be invested to get returns."
3. Don't always trust your gut instincts: "Investing contradicts human emotions," Malhotra says."When the house is burning, you want to run -- and that is natural. But in investing, you need to do the opposite. When fear is paramount, run toward the fire. If it looks like paradise, that is when it is most dangerous." Market shocks are inevitable, but Malhotra points to historical data of the economy's resilience as compelling evidence for getting -- and staying -- invested.