Anyone who’s looking for financial security in the future should start investing as early as their finances allow them. But of course, beginner investors should practice extreme caution to make the most out of their investments. While it’s not uncommon to make mistakes — especially if you’re a beginner — you can mitigate your risks by knowing what to do and what to avoid. With that being said, we’ve rounded up a few tips that can help any beginner investor find success with their investments.
Assess Your Finances
If you’re a beginner investor, you should first assess your finances before making any huge decisions related to your investments. You can do this by creating a personal financial roadmap that allows you to have a hard and honest look at your current financial situation. This is especially important if you’ve never drafted up a financial plan before. Doing so can help you determine what you want out of your investments and the level of risk tolerance you’re willing to take. Your investments can’t always guarantee a profit, but if you evaluate your finances and make a foolproof investment plan, you can protect yourself even if your investments fail.
Familiarize Yourself With Different Investment Types
There are many investment vehicles that you can put your money in. The five most common investment vehicles are bonds, index funds, stock investments, traditional IRAs, and mutual funds. These all have different purposes, different profit schemes, and need different strategies.
These investment types are also assigned different risks, but you’ll get a more specific reading of the risk once you dive into each investment type. Furthermore, researching an investment type will introduce you to various companies, securities, and indexes that all have an assigned risk and profitability at any given time. So before you start investing, learn first about the strengths and weaknesses of every type of investment in order to know which fits your lifestyle and finances the best.
Be Smart With Where You Invest
As a beginner investor, you’re going to want to make one crucial decision right: where you choose to invest your money. There’s a couple of options available for new investors and it’s important to get this right early, as this will shape much of your investment experience.
For starters, you have the choice to employ the services of a financial advisor. When you invest with a financial advisor, you get a personalized reading of your finances to guide you with the investment of your choice. However, financial advisors can get costly as they often have hidden costs that raise the bill. Meanwhile, online brokerages allow you to open an account and start investing from home. These usually offer low costs and have lower account minimums, which can make it even easier for you to start trading, but don’t provide as much guidance or advice as financial advisors and planners do.
Lastly, you have robo-advisors that use algorithms to invest for you based on your risk tolerance. If your investment strategy is not to be too hands on with your investments, robo-advisors can work well for you. There are many ways to invest your money, but be sure to find one that ticks all your preferences so you’ll have an easier time managing your investments.
Be Patient With Your Investments
You’re going to have to wait a while before you make a sizable amount of cash when it comes to investing. Other than devoting time to researching about a specific investment vehicle and learning about different investment strategies, you also have to give your investments ample time to grow. Instead of tinkering with your portfolio, take your time monitoring the growth of your investments and sell them at your maximum profitability. Despite seeming counterintuitive, buying and selling investments less frequently can actually be better for you as it gives you fewer chances to make mistakes that will cost you.
Have any beginner investment tips of your own? Advice to share on your own investment story? Be sure to share with us and fellow Republic Wireless members!
Prepared by Raz Jewell for pwk.republicwireless.com