Investing can seem like an almost impenetrable new world if you don’t have any experience with it, but it’s something you can learn to do just like any other skill. And the good news is that if you don’t want to learn very much, there are still plenty of tools that can help you decide where to put your money. The tips below can help you get started and be as much or as little involved as you want to be.
Know Your Goals
Knowing your goals is one important part of making the right investment choices. Investing for a retirement that’s forty years away will be different from investing for a child’s college education that is a dozen years away. You’ll probably have a mix of short, medium and long-term goals. Write them all down so you can keep them in mind as you find out more about the process.
Know Your Style
It’s also important to know what kind of an investor you are. Are you cautious, or are you a risk-taker? Do you want to be hands on, or do you want to park your money somewhere and have someone else take care of it for you? If you think you do want to be hands on, do you know what that entails? Are you prepared to read company reports and do the necessary research and analysis? If the answer is no, you might be a hands-off type after all.
Know Your Budget
How much money do you have? Investing isn’t the same as gambling, but as with gambling, you shouldn’t spend money that you need for something else. The good news is that you don’t need a lot to get started, so whether you have a few thousand dollars or less than $100, there’s still room for you. If your finances are in good shape but you just don’t have the lump sum to get started, one option might be take out a personal loan from a private lender. You could use this for higher-yield investments. You’ll want to make sure you’re not paying more in interest on your loan than you are getting in return on whatever you put your money toward.
You don’t have to be a financial expert to become an investor, but you should learn the basics. This will teach you such basics as “don’t sit around watching the markets all day.” And what it means when money supply growth is slowing and how that affects the market. You can also learn more about what your preferences may be. You could even spend some paper trading if you want to get more involved, which offers a simulation with no financial risk to you.
You may have your heart set on a particular company that you want to purchase shares in, and you can certainly put some money toward that, but the name of the game for investment success for most people is diversification. An index fund can be a great way to make sure you diversify. Most advisors will help you do this as well, including roboadvisors, which use algorithms to make investments on your behalf after you answer some questions about your preferences.
Disclaimer: This content does not necessarily represent the views of IWB.