How to Invest Money in 2019

The definitive guide on making your money work as hard as you do.

Last Updated: May 13, 2019

The $30,000 Experiment

About a year ago, I had $30,000 saved up that I wanted to invest.

I went with 3 different strategies:

  1. Buying stock in individual companies
  2. Titan, a robo-advisor app
  3. Roth IRA

I put roughly $10,000 in each because I wasn’t sure at the time what option would perform the best.

These are the results of my experiment.

Option 1: Buying stock

Investing in single companies can be very rewarding but it also comes with significant risk.

Stocks can be a good option if you are confident in a particular company. The massive companies like Amazon, Apple, and Google are generally good bets.

The single company that I invested the most in was Tesla. Now despite my positive feelings about Tesla’s future, it was the riskiest investment I made and has performed poorly over the past year.

However, I didn’t buy into Tesla for short-term gains. I am in for the long haul because I believe in the company’s vision and chance to take a significant chunk out of the automotive market.

Now let’s say I invested in a company like PayPal. I’d be up an insane 33% over the past year.

This is the perfect example of the volatile nature single stocks can have. The market always grows over time but can be unpredictable in the short term. This is why you should never invest money you could potentially need in the near future.

Robinhood: The cheapest way to start investing

To purchase stock, you need to open an account with one of several different brokerages. Robinhood has a smooth, user-friendly phone app and pioneered $0 fees. It’s the perfect way to start trading.

For less risk, you can also use Robinhood to trade ETFs.

An ETF is simply a group of stocks or other investments packaged together as one fund. ETFs are lower risk because you expose your portfolio to several companies instead of putting all of your eggs in one basket.

There are ETFs for the S&P 500 (which I’m particularly fond of), different segments of the market like real estate, international markets, and all kinds of other things.

I particularly like the ETFs VUG and VOO and these are what I’m holding in my IRA which I detail a little more down below.

If you’re looking at starting to trade stocks, I would absolutely recommend signing up for Robinhood through the link below.

Just for doing that, you will receive a free stock in Apple, Facebook, or another company. That could be a free $200. It doesn’t get much better than that.

Sign-up for Robinhood here for free stock.

Option 2: Robo-Advisors

Robo-advisors are a hot new trend and in my opinion are the best way to start investing because they do all of the work for you.

You open an account, transfer in money, and their algorithms automatically move your money into different investments.

I started with a robo-advisor called Wealthfront and eventually moved to a new app called Titan.

Titan: The easiest way to start investing

Titan works by analyzing the holdings of the largest hedge funds. These are the funds that the ultra-rich invest in.

From this analysis, Titan forms a portfolio that always consists of 20 different stocks that your money equally invests into.

Again, this is all done automatically.

You can see the different stocks at any time as well as the reasoning for their inclusion in the Titan portfolio. A few of the 20 stocks might change at the end of each quarter for a different company that Titan’s analysis deems to be a better replacement.

It’s a pretty cool system but what’s impressed me the most is their performance.

It’s generally hard to outperform the market as a whole. However, Titan consistently does this because of how it invests your money. Making money with absolutely no work needed is an easy way to win me over.

You can also withdraw your money at any time.

Titan’s only requirements are a $500 minimum deposit and they charge a 1% advisory fee (but zero performance fees). It’s pretty impressive that they are beating the market by a good margin after accounting for their fees.

I’ve even contacted their customer service a few times and each time it was one of the co-founders who answered my questions. I really can’t recommend them enough.

Just for some hard numbers: since starting roughly a year ago, the market is up 6.34%.

My Titan account is up 10.04% after accounting for fees. Those are serious gains.

For an effortless entry into investing, Titan positions itself as a fantastic option. Signing up for Titan through the link below will also score you a permanent 25% decrease in advisory fees.

Sign-up for Titan here for a permanent 25% decrease in your advisory fees.

Option 3: Roth IRAs

For long term investing with money that you can live without until age 60, a Roth IRA can’t be beat.

The reasoning here is that IRAs are tax-free. With other investments, you will pay around a 15% federal capital gains tax on your profit.

However, the main downside with an IRA is that the money in these accounts is meant for retirement. You’ll have to pay penalty taxes if you withdraw any money you made in the account before age 60.

Why a Roth IRA instead of a Traditional IRA?

There are two types of IRAs: regular ol’ Traditional IRAs and Roth IRAs.

The difference between the two is that in a Traditional IRA, you avoid paying income tax on the money that you contribute into the account.

However, withdrawals from the account in retirement will count as taxable income for that tax year.

Roth IRAs are exactly the opposite. You will pay income tax on the money you contribute to the account while withdrawals in retirement are tax-free.

 Traditional IRARoth IRA
ContributionsTax-deductibleNot tax-deductible
WithdrawalsNot tax-freeTax-free

This is why Roth IRAs are more advantageous for younger investors who are in a lower tax bracket.

You pay smaller taxes on your contributions now to avoid paying higher taxes on the significant growth that will occur in the account over time.

I highly recommend opening a Roth IRA for younger investors if you have money that can be set aside for retirement because of all the tax breaks that IRAs benefit from.

Vanguard: The best option for retirement investing

Vanguard is my preferred brokerage for IRA investing and you can open a Vanguard account here.

If you are looking at opening an IRA, it’s worth noting that you can currently contribute up to a total of $5,500 to IRAs annually.

Similar to Robinhood, you can buy stocks and ETFs within an IRA. I mentioned earlier that I particularly like holding VUG, Vanguard’s Growth ETF, in my IRA. It’s holdings actually include a lot of the same companies that Titan does.

I don’t think it’s much of a coincidence of why I like it. It’s focused on companies that forecast significant growth.

I also like VOO which is Vanguard’s S&P 500 fund. Investing here is basically like investing in the market itself and like I said earlier, betting on the market is typically a good decision.

Vanguard even lowered the expense ratio for VOO recently to 0.03% and it was already one of the best in the industry before that. This means that you would only pay Vanguard an insanely low $3 annually for every $10,000 invested in the fund.

Portfolio Composition

Keep in mind that these ETFs consist of stocks and it’s good practice to hold some bond funds as well.

Stock funds are obviously dependent on the market which can have big fluctuations at times.

Bonds balance out this risk.

My IRA consists of about 10% bonds and that is on the riskier side. As you age, you will want shift to a higher percentage of bonds. A very general guideline is the percentage of bonds in your retirement accounts should be obtained by subtracting your age from 100. I’m obviously not following that guideline closely.

Now to close out IRAs with a little performance numbers. Since starting my experiment last year, VUG and VOO are up 7.48% and 6.34%, respectively, giving great gains to my Roth IRA.

Summary

All 3 of the options above are solid routes to start investing.

Accounts with Robinhood and Titan are great for shorter term investing with money that you aren’t comfortable with putting away until retirement. I’m extremely happy with the gains I’ve made in my Titan account. I’m pretty much utilizing it as a savings account and having my money grow by parking it there.

For long term investing, the lack of 15% capital gains taxes make Roth IRAs a performance winner. However, you need to be OK with not having access to this money until retirement.

Alright, that just about wraps it up for the $30,000 experiment.

Now how do you keep track of all your bank, credit card, and investing accounts to get a comprehensive view of your finances and track your personal growth? Read on.

Personal Capital

I recently discovered a website called Personal Capital and am extremely satisfied with its ability to seamlessly connect to every single one of my financial accounts. This includes my bank, credits cards, and all of the investment accounts listed above.

Personal Capital pulls all of the current balances from your financial accounts to produce a high-level view of your financial situation.

The big-ticket feature for me: it tracks these balances to show your financial growth over time.

I love it for that feature alone.

It can also sum up your spending by category across your accounts and show a combined view of all transactions.

Overall, it’s a fantastic tool to have at your financial disposal.

Sign-up for Personal Capital here.

Additional Notes

I was lucky enough to not have huge student loans to pay off after college and knocked out what I did owe pretty quickly. If you do have debts, those should be your first concern before getting into investing.

Also, if your job offers 401(k) matching you should 1000% (yes, 1000%) be maxing it out. You are turning down free money if you don’t.

If you leave your job, you can then rollover your 401(k) into an IRA without it counting towards your annual $5,500 IRA contribution limit.

Same as with an IRA – if your job offers a Roth option for your 401(k), go with that over traditional contributions.

Disclaimer

The aim of these type of posts are to simplify what options are out there and provide some ideas on what’s worked for me. This article is for informational purposes only and should not serve as financial advice. You should consult with a financial advisor or other professional to determine what is best for your individual needs. The stock market carries risk and no guarantee or other promise can be made as to any results that may be obtained from using this content.

Have any suggestions on strategies that should be in this guide? Leave a comment below or send me a message.