A Beginner’s guide to Investing!
The most common misperception about investing is that it is just for the wealthy.
Whereas that might have been true in the past, this barrier has disappeared today. Nowadays, we see more and more firms and services dedicated to making investments open to everybody, even novices and people who have little money to accomplish their goals.
Indeed, there is no reason for starting with so many assets. This is fantastic news, as investing is an excellent method to increase your money.
Importance of Investing
Why invest and take risks when you can simply put your money safely in a bank? Well, simply because keeping your money in a bank will not give you the same returns.
With inflation increasing year after year and changing the value of money, it is good to watch your wealth increase rather than stand still. By investing, you can better combat inflation, increasing your chances of being able to afford the same amount of goods and services in the future.
Investing helps make your money work for you because of interests.
The Must Knows
Embarking on investment is not a hard task, provided you are entering with a steady foot! Here are some things you must know that will get you ready.
- There is risk
We cannot lie to you, risk in investment is real, but the thing is you can match your investment style to how risk averse you are. Invest in a smart way and be aware of impatience, it can be lethal.
- Buy and sell model
Just like a supermarket, the stock market relies on the buy and sell model when it comes to shares. This market will allow you to grow and boost your profits, in a proper pattern.
- You make some, you lose some
While you enter the investing world with a great vision of easy money, this is not the truth. Your money is surely growing, but along the way, you will have to make some and lose some.
- Know your margin
Never invest in more than you can afford to lose! This is no joke! In case of a stock market crash, you will want to be able to face the loss.
- Shares are smart
Many companies issue shares and provide them to the public for investors at small prices. They are a small part of the value of a company. Moreover, they can pay dividends, which is your investment “interest” let’s say.
- Diversification is smart
Well, don’t put all your eggs in one basket. It is the sound decision everyone can make to have a diversified portfolio. It will allow you to invest in several assets and generate multiple returns.
- Research is a must
If you are not very sure of your investment choice, go ahead and do some research. Our blog provides you with all the details you need, and so do our advisors. Take your time and do your research, but do the right move.
Top Investment Areas for beginners
If you’ve reached here, you’re a beginner looking for the best investment areas. Here are our top picks.
- Work retirement plans
If you have a retirement plan at work, start putting money within it. The beauty here is that there are no account minimums, and you can put as much as you want.
One tip here would be for you to contribute as much as your employer is; as this will allow you to capture as much as possible for the future. If you are starting small, you can always match up to their share eventually.
- A robo-advisor
If you want to start investing without having to keep up with the market every second of every day, you can easily do that thanks to robo-advisors. These computer algorithm powered technologies manage your investments for you. The plus side is that they charge low fees relative to human investment managers — they typically cost 0.25% of your yearly account balance, and require no account minimum.
They’re a terrific method for new investors to get started because they frequently take very little money and handle the majority of the work for you. Do not forget though it is very important to keep a watch on your account but a robo-advisor will do the hard job.
- Index funds
Index funds are like mutual funds only more independent, as they track the market index alone. A market index is several investments that make for a portion of the market. Index funds have a passive approach on investment; therefore, they carry low expense rates.
These funds require a minimum investment amount normally, but some companies will bear your share and not require a minimum.
- Exchange-traded funds (ETFs)
A lot of life index funds, ETFs track the market index and are a form of passive investing. They however have lower fees than mutual funds.
The difference remains that they are traded during the day, and are bought for a share price that can fluctuate, much like stocks. ETFs are known to be cheaper with less risk than other investments.