Investing 101: Know Before You Start

Investing can conjure images of rapidly-changing charts and figures, acronyms, and other terminology that can be as impressive as they are daunting. It might seem like there’s a lot to learn and a high barrier to entry, but the good thing is that you don’t need to keep track of everything, everywhere, all at once to make smart money decisions! To start reaping the rewards of investing, here are the essentials to know and consider before you open your first investment account.

Prioritize Debt vs. Saving vs. Investing

Whatever your current financial situation, have a clear plan to allocate your money between the three! Make sure you are setting aside enough to make any minimum debt payments if applicable, and then establish an emergency fund (ideally 3-6 months’ worth of expenses) that is readily accessible, before investing the rest. Exact figures may vary depending on your situation, but make a plan and stick to it! Calculating exactly how much to allocate to debt payments, savings, and investments will take out a lot of the uncertainty out of budgeting, making it easier to get started and get to the next level. 

Consistency is key

Rather than trying to “time the markets,” which is very difficult to do, consistent weekly contributions are the key to building wealth. At Hush, we make it easy to set these weekly contributions, automating and simplifying the process so you’re automatically building healthy financial habits.

Every little bit helps!

Thanks to compound interest, every dollar you contribute to your investment fund has the potential to grow exponentially over time, far more than it would grow sitting in a traditional savings account. This is why it’s important to contribute what you can to your investment fund, even if it is just $2/week! 

Know what you’re investing in

Once you’re ready to get started with Hush and have set a weekly contribution, we build you a portfolio of stocks, bonds, and alternatives with carefully selected Exchange Traded Funds (ETFs). With a diversified portfolio, you’re protected against major losses in any one sector while participating in gains from others.

1. Stocks – Represent partial ownership of a company. At Hush, we don’t pick individual stocks, but rather ETFs that group stocks together according to country or sector, among other categories. Possible investments in a Hush portfolio include Information Technology (XLK), which tracks the overall performance of the technology sector; Japan (FLJP), which tracks Japanese market performance; and Merger Arbitrage (MNA), which follows companies that join forces through mergers or acquisitions, among many others.
2. Bonds – When you purchase a bond, you essentially make a loan. The issuing entity (government, company, etc.) uses the money from the purchase in the manner it wishes, before repaying the loan with interest, resulting in a slower but reliably steady growth component to your portfolio. A Hush portfolio might include US Corporate Mortgage Backed Securities (CMBS), which allows exposure to the US-government-backed mortgage market; US Convertible Bonds (VCIT), which includes assets that can convert to stock; and Developed Corporate Bonds (VCLT), which are bonds issued by companies in developed countries outside of the US.
3. Alternatives – These are assets that don’t fit into the first two categories. Examples include precious metals such as gold (IAU) and platinum (PLTM), as well as currencies such as the Swiss franc (FXF).

Understand risk vs. return

A key point is that risk and return are tightly correlated: if you want to aim for a higher return, you have to accept a greater possibility of losing more money. Of the three assets (stocks, bonds, alternatives), stocks are the riskiest assets but provide the highest potential return. As such, a portfolio with a higher percentage of stocks will show higher risk and higher potential returns. At Hush, you can choose between three risk levels: the Protector (lower risk), Strategist (medium risk), and Adventurer (higher risk). Choosing the right one for you depends on your personal risk appetite and on timing: if you might need cash soon, it would be more prudent to err on the side of caution, but if you can afford to wait, a slightly higher risk level might result in higher yields long-term.

Don’t quit at the dip!

There will always be periods of ups and downs in the markets. It might be tempting to pull your money the moment you see red, but don’t let short-term losses keep you from long-term gains. At the same time, at Hush, we don’t keep your money prisoner! You can withdraw at any time without paying any fees, and transactions typically take no more than two or three business days to process.

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