From the time most people are young, there’s some financially-savvy relative telling them that “this check could turn into a million dollars by the time you’re thirty!”
We know that investing our money is the smart thing to do, but it’s kind of daunting to get started. This is especially true when you don’t have that much money to begin with. Bills, food, gas, and other expenses certainly take precedent when you’re struggling to get by.
Additionally, most people don’t know the first thing about investing because it’s not always taught in school. We’re going to cover some basic investment advice in this article, giving you a little insight into how to get started.
Table of Contents
Investment Advice for Beginners
Even if you’re not ready to start investing right this minute, this guide will give you some food for thought as you get financially stable enough to start letting your money work for you.
Additionally, our hope is that this information will show you how much easier it is to invest than it seems. It’s not always easy to make a fortune, but the process is simple to get started with, especially if you work with an investment advisor.
Even if you don’t want to talk with professionals right now, there are enough simple options for any person to get started investing. With those things in mind, let’s take a look at the basics:
Building a Portfolio
You’ll often hear people talk about their “portfolio.” This term describes the set of investments or stocks that a person has money invested in. It typically refers to a person’s stock portfolio.
As you get started, you might wonder where in the world to begin putting your money, and this is where a professional can come in really handy. That said, the general idea is to spread your investments around low and high-risk stocks.
Low-risk stocks will give you a smaller return on investment, but you’re far less likely to lose your money. High-risk stocks have the potential to yield more returns but pose a higher chance of failure.
The main breadth of your portfolio should consist of lower-risk stocks. A portion of your wealth should then be distributed toward higher-risk stocks that you think could bring in some significant returns.
That said, the money you put toward risky investments should always be money that you could stand to lose. Those investments can generate big leaps in your value, but it’s never smart to stake all of your money on one or two stocks.
Doing Your Research
Intelligent investing is a process of spreading your wealth out evenly among high and low-risk stocks but also researching where the market is leaning.
You should invest based on the insight you gather from reading about different industries and predictions about how the market will fare in the future. If you do your research well, you can see routes toward building your wealth in the long run.
It’s important to think about the long-term as well. Some stocks will shoot up significantly in the next year, while others will take fifty years to generate much more wealth. It’s exciting to think that you could accumulate $10,000 in six months with a big bet, but it’s much wiser to invest in a company that will yield $100,000 in thirty years with the help of compound interest.
The point is, whether on your own or with the help of an advisor, you should look to set yourself up for the distant future with the majority of your portfolio.
Play Around With Stocks to Get Started
If the information above still has you skeptical about whether or not you should start investing – give it a shot.
You don’t need very much money to get started. You could buy one or two shares of a stock that’s worth $3 and see how it changes over time. You can sell those shares and buy a couple more of a different company.
The nice thing is, trading online typically comes free of charge and you can buy and sell as much as you like. It’s an excellent way to dip your toes into the market and explore how these things work. You can think of it as a little bit of practice before you do the real thing.
You wouldn’t try to run a 5k without exercising or stretching for a few months before the race. Similarly, you should get a feel for the market, what it is, how it operates, and how money moves before you start investing more significant amounts.
Another thing to keep in mind is that a $50 investment could actually turn out to be an incredibly lucrative thing. Maybe you invest a little chunk of change into a high-risk stock and see where it goes.
Stocks have gone from $3 to $2,000 in a matter of a couple of years. If you’re interested in playing around anyway, where’s the harm in seeing if your $50 could turn into $5,000?
Speak With an Expert
A financial advisor or investment expert can help you understand the ins and outs of the market. You’ll want to get a feel for how much money you can make, how much you can afford to invest, and how it will be invested in the first place.
Your hard-earned money shouldn’t be thrown to unknown investments without any thought. It’s important to know that you’re in safe hands and that you won’t experience any significant losses right off the bat.
Talking with a professional can clear up all of these issues and offer some peace of mind while you’re getting started. Additionally, these individuals can tell you whether or not you should start investing right now.
In some instances, it would be smarter to pay off debts or wait until your situation changes to make investments that will yield significant returns.
Want to Start Investing?
Hopefully, the investment advice above was enough to get your thoughts stirring about how you could start making your money work for you. If you’re interested in more information, we’ve got you covered.
Explore our site for more ways to move toward financial stability.