A Guide That Will Help You Start Investing Your Money Today!
Learning the art of investing, whether in the stock market or in real estate, can seem like a complicated and intense process. Besides learning the fundamental vocabulary used day-to-day and researching the various ways you can make a return on your initial investment, you must also be aware of the potential risks investing can hold. It is crucial to know which questions to ask before getting started. What is investing? What should I invest IN? How do I get started and how will investing impact my financial future?
To help answer some of your burning questions, we will be discussing some investing tips for the absolute beginner, to help set you down the path to fiscal success!
Start Investing Early – Although easier said than done, investing your money is something you want to consider as soon as possible.
Why is it so important? Simple. Inflation is normal and an unavoidable part of life. The problem with cash or (most) savings accounts is that it will never keep up with annual inflation rates. If you’re keeping $20,000 under your mattress, chances are that money will be worth much less 20 years from now than what it is worth today. By investing, you are not only contributing to the expansion of the economy, but you will also be earning an interest rate that (more often than not) BEATS the rate of inflation.
Set Realistic Goals Specific to YOU – Once you decide to start investing, make sure to make investment goals. Why are you investing? What are your expectations? How much money can you (realistically) risk?
If you’re investing with the hopes of one day cashing out upon retirement, than maybe long-term stocks would benefit you, as there is a higher reward for a relatively low risk factor. Investing in real estate may be another option to consider.
Looking through your current finances will also give you an idea of how much you can afford to spend. More specifically, how much you are willing to LOSE. Most people begin investing to make money, but few will think of the worst-case scenario. If you invest every penny you have, essentially putting all of your eggs in one basket, this may result in bankruptcy. It is crucial for your financial wellbeing to have an honest conversation with yourself, coming up with an appropriate amount you are willing to initially invest.
Understand the Potential Risk – During the first wave of the global COVID-19 pandemic, stocks plummeted, causing panic, and resulting in poor decision making.
While some were selling their stocks in a desperate attempt to save and store what little cash they had, others were taking the opportunity to buy shares while they were at their all-time lows. Although many of those companies have since made a comeback, there have been devastating losses for those who chose to panic sell.
Chances are, your investment will bounce back once whatever was affecting it has passed, so it is wise to ride that wave and hold onto your shares while simultaneously keeping a vigilant eye on the market’s trends.
Investing may seem like a daunting task that requires a lot of work and countless hours of research. Although there is some truth to that, investing is also a learning experience. As you grow and educate yourself on the potential risks and rewards, you will shift your strategy and invest more wisely in the future!