As you probably know, there are many ways to invest: stocks, cryptocurrency, property, the list goes on and on. However, due to financial illiteracy, many never know how to start investing properly. If this sounds like you, don’t worry! After taking a look at these investment tips for beginners, you’ll be ready to take the first step…
Start With Basics
Many think that they just need a few investment tips and one good opportunity to put some money into. However, don’t get ahead of yourself. First, sit down, and think realistically about your goals. For instance: how much money do you want to invest, how much do you need to earn, and how quickly would you like to earn it. That will narrow down the type of investments you should look into. Afterward, its time to do a lot of research, especially regarding diversification and risk. Then, make a detailed plan to reach your goals.
If investing in the stock market, don’t listen to tales of perfect methods and windows of time, as they simply don’t exist. David Wilson, a New York financial planner with Watts Capital, says that most professional investors have never fallen into a pit of so-called “market timing.”
Stocks Or Bonds?
When preparing to invest, many beginners have the exact same question: should they buy stocks or bonds? Let’s start with the differences between the two. Stocks, or shares, represent an ownership position in a publicly-traded corporation. That means that they own a percentage of the company! As the company earns money, the investors receive a portion of the profits, usually based on how much of the company they own. Meanwhile, bonds are essentially a loan that an investor gives to a company, or even the government. After a certain amount of time, determined by the length of the bond, the company pays back the investor the cost of the bond, plus interest. However, bond owners do not earn a part of the profits every year. Ownerships of bonds can be traded just like stocks, that’s why the price of them can rise and fall depending on the interest rate.
So which is right for you? Well, that depends on you. However, if you’re still not sure after figuring how much you want to spend and earn, it might be time to look for some more help…
“Seek advice” doesn’t mean asking about stocks at the Thanksgiving table. When it comes to investing, people often need investment tips from professionals. And getting professional advice is getting earier, and cheaper, than ever. Take Robo-advisor apps like Acorn or SoFi, for instance. These apps use algorithms, along with a questionnaire, to determine the best ways to use investor money. Meanwhile, they also have articles and group discussions that eventually teach users how to invest themselves!
Of course, if you have the money, nothing beats a real-life financial advisor you can go visit in an office. They will listen to all questions and concerns regarding any platforms and methods, and then recommend the best option for the client. Plus, they can often help advise on things like taxes and other financial difficulties.
Take Care Of Your Finances
As people become better investors, more opportunities present themselves. Unfortunately, they won’t all turn out great. In reality, you should likely stay away from the advice of family members or those who offer a “sure deal.” Instead, take proper care of your finances by investing in what works. After all, its your money, not theirs! Hear someone talking about incredible returns with minimum investment? Probably not true. And don’t just jump on a bandwagon (or off one) because someone tells you so. Investors who regularly flip-flop in the stock market lose, on average, 80% more than those who stay the course. Lastly, avoid borrowing money to invest. If the investment does not work out, then you have to pay back the loan empty-handed.
Whether it’s easier to find information on the internet or use applications for investing, we recommend contacting a professional financial advisor from the start. It ensures the safety of your plan and capital. Good luck with investing!
Sources: TradingBlvd, SmartAboutMoney