Investment

Beginner’s Tips to Investing

Getting into investing as a beginner can be a daunting prospect. For very good reasons. There are countless risks and considerations you will need to keep in mind and watch out for. Responsibilities and realities you need to be aware of. So many things that make even the idea of investing, no matter the amount of money involved, seem potentially disastrous for you and your financial security.

But it is not all bad. It just means you need to take investment seriously, with your eyes and ears open, and an awareness of yourself and the investment landscape. After all, it’s your money, your company’s money, your family’s.

Hopefully these Beginner’s Tips to Investing will help you better prepare yourself before you set out on your investment journey.

Who Are You as an Investor?

Beginner’s Tips to Investing

According to Investopedia, among the first things you need to ask yourself is ‘who are you as an investor?’ This is a question you need to have answered long before you commit yourself and your money to anything. You need to have already figured out what your investment goals are and the amount of risk you are willing (and able) to face. Online brokers such as Fidelity and Charles Schwab will ask such questions when you try to set up a brokerage account. 

You may see yourself as an actively involved investor regularly managing the growth of your wealth. You may prefer the opposite, for the most part letting your investment grow on its own and occasionally checking in according to your convenience.

Most ‘traditional’ online brokers like Fidelity and Schwab allow for investment in stocks, mutual funds, exchange traded funds, bonds, and index funds. 

Start Investing Early

If you can consider investing sooner rather than later. Investment by its nature pays off more in the long term. Compound earnings is the reason why. According to Brianna McGurran and Arielle O’Shea of NerdWallet, compound earnings is when “your investment returns start earning their own return.” It is what makes it possible for your account balance to “snowball,” to grow larger as it gains momentum on its own.

For a more concrete understanding, think about this: If you invest $200 each month, every month for 10 years at an average annual return of 6%, by the end of those 10 years you $33,300. Of which $24,200 was what you invested. The difference of $9,100 is the result of the interest and your investment has earned you.

The sooner you start investing the smaller you can start as well. By starting small and sooner you will have much longer- decades even- to ride out the highs and lows of your investments until you reach a point you are comfortable with your earnings. 

Ways to Invest

There are numerous avenues these days which you can use to place and manage your investments. One of the most prominent is through online brokers.

As Investopedia points out, online brokers come in two categories, full-service and discount. The former, full-service brokers, offer retirement financial advice, healthcare, and all ranges of services relating to the management of your money. It should be noted that full-service brokers charge incredibly high fees making their services more feasible for clients with higher net worth. 

Discount brokers provide access to tools which allow you to choose and place transactions on your own. As the financial industry has become increasingly digital, discount brokers have become both more common and more advanced. A higher number of discount brokers are also offering financial education materials on their apps and web pages.

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