Published on June 10th, 2019 | by Sunit Nandi0
Tips for Getting Started with Investing
There’s quite the misunderstanding about what it means to be an investor. Some people view it as something that only the very wealthy can do, requiring a huge amount of excess funds. Others view it as gambling with your hard-earned income on a casino like カジノスロット おすすめ and therefore avoid it completely.
In reality, both of those are misconceptions that completely miss the point of investing. Investing is calculated, thought out, and strategic — meaning one should treat investing as building a future based on risk you can measure. Additionally, understand that investing is a means to financial security, and you don’t have to be loaded to start doing it (though, as you will see, a little bit of stability is ideal).
If you’re wanting to invest but aren’t sure where to start, then this article is for you. The practice of investing can be a fantastic way to build up your finances in addition to preparing for a future. But first, you need to know what you’re doing.
Image Source: Pexels
When Is It Safe to Invest?
The basics of investment start with ensuring you’re safe to do so. Ask yourself these questions regarding your current financial state:
- Is my debt manageable? If the costs of managing your debts are too high to begin investing, will those costs decrease in the near future? For instance, those making monthly payments toward purchasing a car instead of leasing will have substantially more capital to invest after the car is paid off.
- Do I have an emergency fund set up? This is essential to managing current debts as well as continuing to invest, even in the face of unforeseen expenses.
- Do I have funds that I can give to an investment apart from my emergency fund? You don’t want to use your emergency fund for investments, as doing so can make coping with unexpected auto repair or medical costs difficult.
These are the kinds of things you should be asking yourself. Take an example from rock climbing — think of these safety nets as your harnesses. You might be a great climber, but if something goes wrong, you need to know you won’t plummet below.
That said, make a checklist before you make any investment decisions. It should look something like this:
- My debt is mostly paid off, and what’s left is manageable or useful for building credit.
- I have a stable emergency fund, and I will not have to dip into it in order to invest.
- I have researched the opinions and experiences of others on specific investment opportunities before committing to one.
- I have a set of funds that I can place toward this that will not drastically affect my ability to meet my basic needs.
Without these precautions met, an investment isn’t safe. You don’t need to be rich to begin making investments; you just need to be able to safely handle some risk.
Types of Investments
Investing should never be something you do blindly. It requires that you know a bit about what you’re investing in and what the different rules of each investment type could be. What a company does, what purpose your investment serves, and the general projection of its success are all important things to consider before trusting your funds to something other than your own hands.
NerdWallet listed four basic types of investments you can look into when you’re starting out:
- Stocks: Shares of a company’s ownership — which sounds intimidating, but it’s easy to learn to trade stocks.
- Bonds: A loan to a company or government entity which collects interest
- Mutual Funds: A compilation of different investments managed and organized by a third party
- Exchange-Traded Funds (ETFs): A mixed bag of securities bought and sold through a broker
Each of these investment types vary in how they’re put together, who is in charge of them, and how money is gained. That means that you should look into the history of every party you work with, and what kind of investment they offer. Watch the market to predict what might happen next — this is especially important when it comes to stocks. If you can decipher what risks are worth taking and which seem sketchy, you’ll be saving yourself a lot of trouble.
One of the biggest benefits to good investing is the security it could bring you. It’s about your safety nets, your spending power, and your financial ground. But it doesn’t stop at the idea of stocks and bonds. In fact, you are most likely already investing in things that work for similar purposes — you may have just not thought of them in those terms before.
See, investments are your future funds as well, and that goes for retirement funds. That said, because retirement funds aren’t often looked at as “investments” in this way, people forget they are customizable. That said, you may want to consider customizing the investments you make with your Roth IRA. For instance, you can make some really smart investments by forex trading through a self-directed IRA or a Roth IRA. This can certainly fill your account with more than your standard employer deal.
Additionally, the power of cryptocurrencies is increasing, and they have now entered the ring of investments with substantial benefits as well. There are more cryptocurrency investmentment opportunities coming up due to the access and innovations being made in blockchain technology that could have real-life benefits for you as well. While investing and trading cryptocurrencies will require some research and reasonable caution, it may still be a way to obtain spending power without risking too much of your financial status and security.
When assessing any other potential investments, it’s important to exercise caution, particularly if the promised returns seem too good to be true. Some red flags to watch out for include a lack of transparency, unrealistic claims, or if the organization offering the investment isn’t registered with the U.S. Security Exchanges Commission. These are clear signs of a scam — potentially a Ponzi scheme.
This caution should be exercised across the board regarding investments. Make sure you’re in a place where you can reasonably invest before diving in and that you understand the different types of investment opportunities. Ensure your decisions are informed, and stay on your toes. Learn to think about where your money goes in similar terms as well, like retirement funds and cryptocurrency involvement. Applying all of this knowledge will make you a smart investor and hopefully bring you some financial freedom.
What questions do you have about investments? What tips do you have for new investors? Let us know in the comments below.