To many, the term “investing” instantly evokes images of Wall Street men in suits, closely monitoring the flux of millions on a stock exchange ticker. However, with a wide array of options today, beginning your journey into investing has become simpler and more accessible than ever. It’s perfectly okay to feel apprehensive and have a ton of queries when starting. Just like any other first-time experiences such as driving, bicycle riding, going on a date, or taking up extreme activities like skydiving or rolleramp riding, investing too could feel like a big leap.
The combination of a learning curve and the fear of risking one’s hard-earned money can certainly make investing seem intimidating. But remember, this path is actually one of the surefire routes to financial security. No successful investor started knowing everything; we all learn as we venture forth.
SO, WHAT IS INVESTING?
Investing is the act of acquiring assets that appreciate over time and deliver returns either as income or capital gains. Broadly, investing can also be regarded as dedicating time or resources to enhance one’s own life or contribute positively to others. Financially speaking, investing involves buying securities, real estate, and other valuable assets with the intent to secure income or capital gains.
WHERE DO I BEGIN INVESTING?
The best approach to start investing depends on your financial objectives and affordability. However, here are four key points to consider.
1. UNDERSTARKING YOUR FINANCES
Before plunging into investing, it’s vital to have a clear understanding of your financial state. It’s a prerequisite to have some savings tucked away before you even consider starting an investment account. But how much is enough? Generally, it’s advisable to clear debt, establish an emergency fund, and start contributing to your retirement pot prior to investing elsewhere. Most successful investors recommend having around three to six months’ worth of living expenses saved up before considering long-term investments.
2. DOING YOUR HOMEWORK
Make sure you understand the product before you part with your money. It’s common for people to buy into a sales pitch without considering the product itself. Fathom the different types of investment opportunities such as bonds, shares, mutual funds, and property. You can start by speaking to investment consultants, engaging a financial advisor, or even discussing with family members. Reading finance-related books and publications is also a great idea.
3. WHERE TO INVEST
Once your income and savings improve, consider diversifying by investing small amounts across various products. That way, if an investment doesn’t work out, you have others to fall back on. If your funds are limited, it’s a good idea to start with an investment plan such as a company pension.
4. CHOOSING THE RIGHT INVESTMENT ACCOUNT
Investing can be relatively easy and doesn’t require a large sum to start with. Deciding the best type of investment account for you depends on your preferences and circumstances. A robo-advisor could be ideal if you want to invest but don’t have the time or desire to manage your own investments. If you’re a hands-on kind of person, an online brokerage account might suit you better. And if you’d prefer professional assistance, engaging a financial advisor could be the best route.
IN CLOSING
For those preparing to embark on their investment journey, remember to be patient. Investing demands time and there will be highs and lows. The key is to stay the course, manage your expectations, do your due diligence, and most importantly, enjoy the journey.
