If you feel overwhelmed by the idea of how to start investing, you’re not alone.
The idea of putting your money into an investment where you could lose everything is a scary thought. However, successful investors are not made in a day. It takes patience to learn the craft.
Below are five key beginner investment tips to help you along your path.
1. Start Now
The biggest hurdle for a beginner is often getting started. You feel like you need to wait for the perfect moment when the market is down (or up).
However, there is no perfect moment.
Some years your investments will go down, other years they’ll go up – it’s part of the process. Investment is a long-term process so the most important thing is to get started now and keep adding to it.
2. Save Regularly and Invest Your Savings
To build up your investment wealth you need to add regularly to it. Commit to saving and investing 5-10% of your income as soon as you start earning a regular salary.
Many beginner investors focus too much on how their portfolio is performing. This is outside of your control. The biggest factors for successful investing are staying invested and saving enough, so focus on maintaining or increasing your savings rate instead.
3. Set Beginner Investment Goals
The first step in creating an investment strategy is setting your investment goal.
Give each goal a time frame and set a dollar amount next to it. It could be a short-term goal like a holiday to Spain or a long-term goal like having enough for retirement. Having goals will motivate you to keep saving and investing.
The time frame you set for your goals is also an important factor determining the risk you should take on. While your individual risk tolerance plays a part, in general, a longer time horizon allows you to invest more of your portfolio in riskier assets like stocks which also give higher returns.
The longer time frame acts as a buffer for the volatility of higher-risk assets.
4. Avoid Making Emotional Decisions
This can be hard when media headlines are screaming that a stock market doomsday is about to hit. However, remember that the media has a different agenda for you. It wants to get more readers with sensationalized headlines, whereas you want to build long-term wealth.
Stick to your investment strategy and avoid making investment decisions based on knee-jerk reactions or the latest headlines.
5. Don’t Be Afraid to Ask for Help
Lastly, if it all seems too overwhelming, there is no shame in asking for help from experts. They’ve had years of experience and can pass on this valuable knowledge to you.
For example, you can contact financial planners through their website and get help setting up your investment goals and investment strategy. They can also help advise on the best types of assets to invest in based on your risk profile.
Use These Investment Ideas to Reach Financial Success
On your beginner investment journey, it’s important to educate yourself on best-practice principles. If you follow these five basic investment tips you will set yourself a foundation for investment success.
For more beginner investment tips, check out our ‘Business’ section.
