As I have stated many times on this site before, it is of utmost importance to be invested in the stock market. The earnings you make from your career will be your biggest wealth building strategy. However, second only to that, will be what you invest in. Many people have been able to build significant wealth through investments.
While you can find many tools and resources on this topic on both online and offline platforms, a beginner may find it hard to know where to start. What should you be looking for anyway? And what are the key things to think about and ask before you even put down money on an investment? This article will give you some tips to get you started as a beginner. Hopefully after reading, you’ll realize that this is not as hard as you may think.
Investing Starts with Understanding You
Many people don’t know that investing is sort of like a business. There are decisions to make, timelines to meet and emotions to control. And if you want to get into the business, you need to understand what kind of businessperson you are.
That means doing some extra homework to understand how you’d like to invest. For example, some people prefer doing it by themselves while others hire someone to make investment decisions.
But more importantly than that, you will need to answer some very important questions such as:
- What kind of investment would I like to make? (ex. – stocks, CDs, real estate, collectibles, etc.)
- What kind of goals or outcome do I want to achieve?
- How long will it take me to reach my goals?
- What type of risk tolerance do I have?
Thinking through questions like these at the outset before you put any money down will set you up for success in the long run.
Have an Investing Budget
Obviously, if you want to invest, you need to fund that from somewhere. Stating the obvious, you need money to make money. And if you need some cash, you will have to plan for it in your monthly budget.
Budgeting is the #1 tool for getting your financial life on track. You can’t invest unless you’ve first shown you can handle the month-to-month tracking of your income and expenses. Once you are making more than you spend, have some money saved up and your debt paid off, then you are ready to invest.
Related Content: The Ultimate Guide on How to Make the Best Monthly Budget
When it’s time to invest, you will have to look at your budget to understand how much money you’d like to put into the stock market. Then you will have to figure out how you’ll raise that amount. Remember, each brokerage provides a minimum amount needed to open an account. So, if you don’t have enough money, you will have to save up until you reach that amount before opening an account.
Choosing a brokerage
In the early days of investing, finding a brokerage wasn’t easy. The Internet has made that less of a challenge. Opening an account is super easy and takes very little time.
However, before you open a brokerage account, you need to know the best one that fits your needs. Do your research online to see what each brokerage firm offers. You will want to consider factors such as commission, the investment selection they offer and the online research and tools they provide. Also, if you are a passive investor, going for a Robo advisor is another option to consider. They will help you make decisions like the best stock for your portfolio today.
Time and Investment go Hand in Hand
Investment requires strategy. Therefore, if you think of it as a get-rich-quick scheme, you could be on the way to losing most of your capital.
Related Content: Legit Get Rich Quick Schemes
Give your investment time. If you’d like short-term investment options, it’s good to ask. But for long term investments, make sure that you give it enough time to earn maximum profits. Time and rate of return are your biggest allies when investing. The earlier you start and the greater your return, the more money you will make.
Another thing to consider is that, as an investor, whether you are doing it passively or actively, it’s good practice to keep checking your portfolio. I wouldn’t recommend doing it every day as that will drive you crazy given the ups and downs that occur in the stock market. However, a routine review of your investments helps to make sure you are still in line with your stated goals.
Conclusion
As you jump into a stock investment, it’s good to take your time. Your money is at stake, and one wrong move or bad decision can lead to a significant loss. Also, you can start small and grow your portfolio with time. But if you have the capital, invest larger amounts. You’ll have the opportunity to spread your capital in many different investments.
If you are ready, check out our Ultimate Beginners Guide to Investing Money the Right Way. And please feel free to email if you have questions.
Answer a Question or Leave a Comment Below: What other advice would you give someone who is just beginning to invest? What investing strategies have worked best for you?
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