Investing Challenges make investing money more fun and help you build long-term wealth. There are many ways to gamify investing and different types of investing challenges you can participate in. This ultimate investing challenges guide will teach you all about the power of investing challenges, determine which challenge is right for you, and how to get started.
If you are interested in learning more about financial gamification in general check out Ostrich’s ultimate financial gamification guide.
Why Investing Challenges
To build wealth, it’s important you invest your money wisely, regularly, and let the power of compound interest work in your favor. Using investing challenges you can identify the type of investing that is best aligned with your financial goals. There are millions of ways you can invest, but not all of them will help you achieve the most important things in your life. Through investing challenges you receive guidance, accountability, and a fun way to build towards your goals. Ultimately, you want to ensure your money works for you so you can stop working for money in the future.
What are Investing Challenges
Investing challenges are game-like challenges that last a set period of time, have a regular check-in, and have a specified goal. Investing challenges can be done by individuals, couples, or even groups of people. Research from the American Society of Training has shown that combining a regular progress check-in with an accountability partner increases your likelihood of achieving a goal by 95%. Ostrich’s investing challenges lean into this finding by making it easy to find and invite others with similar goals to be your accountability partner in investing challenges.
Types of Investing Challenges
There are many ways to invest your money so selecting the best type of investing challenge for you is crucial. Your goals, relationship to money, and how much money you have to invest will all factor into what type of challenge is right for you. To best determine the route to take, download the Ostrich mobile app which will suggest the best investing challenges that are aligned with your goals.
The other key characteristics to pay attention to when identifying the right investing challenge for you are the length of the challenge, the frequency of the check-in, and the goal itself.
Length of the challenge
How long will the investing challenge last? It’s important to set an end date. Even though you will continue to invest into the future, the end date helps you stick to the goal in the short term and adjust your goal as you go.
Common challenge lengths include:
- 1-year investing challenges; examples include Bump It Up.
- 6-month investing challenges; an example is DCA is the Way.
- 3-month investing challenges; an example is Acquire Then Retire & The Real Real.
- 30-day investing challenges; Daily Double.
Frequency of the check-ins
The second factor to consider is how frequently you wish to check in for your investing challenge. It’s important to keep your goals top of mind, but you also have to be realistic in your ability to invest on a regular basis. It’s also important to remember that certain investments are volatile in the short-term and what often hurts people the most is panicking when an investment temporarily drops in value.
There is a saying that time in the market beats timing the market. The reason this saying holds value is that no one can predict the future and thus it is foolish to think you can time the market perfectly. Instead, investing as early as possible and continuing to add to your investments over time will produce superior results.
Common investing challenge check in frequencies are:
- Weekly Investing Challenges, such as Weekly Wealth
- Monthly Investing Challenges, such as DCA is the Way, The Real Real, and Acquire Then Retire.
- Semi-annual Investing Challenges, such as Bump it Up
Goal setting
The third major part of an investing challenge is the goal. What is that you want to accomplish? It could simply be getting started on investing in general, investing a specific amount of money, or investing for a specific goal like retirement or your child’s education.
Example goals include:
- Building an inveting habit.
- Putting money towards retirement.
- Retiring early.
- Building generational wealth.
Who Should Use Investing Challenges?
Investing challenges are great for those just starting out, need extra support, or simply want an easy-to-follow path. Using investing challenges you’ll receive the support you need to stay on track towards your goals and take advantage of compound interest. Prioritizing long-term goals far into the future isn’t easy, which is why investing challenges are great tools to keep you motivated and increase your chances of succeeding. Additionally, investing challenges are great for those who wish to teach others how to invest.
Implementing Your Investing Challenge
Investing challenges can be done the old-fashioned way on pen and paper, in group chats, or using Ostrich’s mobile app.
It’s important to pick the right type of investing challenge and ensure you’ve got a way to continually track your progress.
Ostrich’s app has built-in reminders, rewards, and tracking to make it as easy as possible to get started and stick to an investing challenge. Additionally, it’s easy to invite others to join you in group challenges and keep your dollar amounts private to you so you can participate with others who have different money targets.
We are partial to our app but recommend using whatever tool works best for you.
Tips for long-term investing
Here are some long-term investing tips to help you when starting an investing challenge!
Time in the market is more important than timing the market
Due to compound interest, the daily, weekly, and monthly fluctuations are not as important for long-term investing. It’s more important that you are investing regularly so you can let your money grow in the markets. Historically the S&P 500 has returned 10-11% since its inception in 1926 according to Investopedia.
The Power of Low-Cost Index Funds
Low-cost index funds are a way for you to invest in a basket of stocks all at once. This allows you to achieve the average return without having to constantly trade stocks and become an active investor. In fact, only 24% of actively managed funds outperformed low-cost index funds in the past decade, according to Morningstar. Our favorite index funds track the S&P 500.
Patience is a virtue
When investing in the long-term it’s best not to constantly check your stock portfolio. Research has shown this can negatively impact your mental health. That being said it is important to monitor periodically, but avoid making big decisions when you are at a peak emotional state.
Use tax-advantaged accounts
If you are investing for the long-term and don’t need to sell your stock portfolio for the cash any time soon, prioritize investing through tax-advantaged accounts. For those with a 401k or 403(b) use those accounts first and then consider contributing to a Roth IRA or traditional IRA. There are limits on how much you can contribute each year so check the limits on the IRS website (401k, 403(b), IRAs).
Benefits of investing Challenges.
There are many benefits from using an investing challenge to achieve your goals.
Your money works for you
Every time you invest using the dollar-cost averaging approach you put your money to work for you. This is how to build wealth in the long-term is to have your money making more money. While early on it may not seem like much is happening initially. Over the course of 5, 10, 25, 50 years your money will continue to grow looking like a hockey stick of growth.
Feel more in control
It’s easy to get bogged down in the minutia of day-to-day life. Yet, when you employ dollar-cost averaging you will start to feel less anxious and more optimistic about the future. Investing for the long term builds your safety net and a strong foundation to live the life of your dreams.
Better financial decisions
When your money is growing through investments, you will feel less reactive to the random swings in the market and get-rich-quick schemes that often get thrown around in the investing space. You’ll be in a better position to research investment opportunities and invest in a way that aligns with what you wish to accomplish in life.
Tools to get there quicker
Automation
Set up an automatic transfer from your checking account to your investing challenge account. This will ensure that you don’t forget to invest and make it easier to stay on track. Additionally, if you set up the transfer through your brokerage account you likely can automate the purchase of the stock as well. This is one of the best ways to take the burden of remembering off of your shoulders and allow you to focus on other more fun things in your life.
Retirement account
There are tax advantages to investing through your retirement account. Don’t have a retirement account? That’s okay! Setup an individual retirement account (IRA) that you control through one of our partners. Check to see if a Roth IRA or traditional IRA is better for you.
Related investing challenges include: Acquire Then Retire, Feeling Rothy, DCA is the Way, You’re FIREd, The Real Real, and FIREd Up.
What to do with your newfound habit
Now that you are investing in your future through investing challenges, you can focus on other important financial goals. Here are some ideas of other healthy money habits you can work on next.
Build your emergency fund
It’s important to have at least a few months’ worth (6 months is considered healthy) of living expenses built up. This provides a cushion for your quality of life in case you lose your income. If you feel like 6 months isn’t enough try building your savings to the level of your annual salary or until you feel comfortable.
Invest for the long-term
Another great use of your new savings is to invest. Research shows that investing for the long-term (10+ years) is the way to go. We recommend getting started with low-cost index funds vs. purchasing individual stocks and using the dollar cost average investing method. Check out our favorite brokerage accounts and our favorite auto investing tools on the Ostrich App.
Take a small calculated bet
Investing for the long-term is proven to be the most sure-fire and safe way to build wealth, but it is boring. Boring is good for your major goals. We like boring! But if you have a little extra money after making your boring investments and you are okay with losing a small amount of money, explore alternative moonshot investments. This could be anything from investing in cryptocurrency, NFTs, startups, art, collectibles, or that penny stock. The key is not to make this your main strategy. Never invest more than you can afford to lose not just financially, but also psychologically.
Give back
When you have built a strong financial foundation for yourself, one of the most rewarding things you can do is to give back. Whether it’s donating time, money, or resources, you can support the causes that are important to you. Check out the Don’t Hate Donate challenge on Ostrich.
Conclusion
Investing challenges make investing money fun, simple, and keep you accountable for your goals. There are different types of investing challenges that can be customized to meet your financial goals. When you participate in investing challenges with others you increase your chance of success and feel good sharing your wins with others. Using Ostrich, you can find the perfect investing challenge aligned with your goals and even invite your friends to join you. Download Ostrich to get started on your first investing challenge today!
