How to Start An Investment
Investing is quite popular recently - suddenly a lot of your friends or colleagues are talking about stocks, markets and index funds. You get lost in this whole new world of unknown terms and mechanisms at first, but many stories of success and your curiosity push you to enter the world of investment. |
It is always tough to start, especially in a completely alien field. A lot of questions appear immediately after you simply put the word “investment” in a search engine. Where do people get the starting funds? What is the difference between a bond and a stock? Why are there so many ways of investing?
The amount of new information can easily scare away a rookie, but in fact, you don’t have to know every single detail about investing before starting. Actually, even the biggest investors are constantly learning. Investment is not a field where you can learn everything by heart and leave it like that. So indeed, to get started with investing you only need to be familiar with the plain basics.
First Steps To StartIf you are already absolutely sure that you are ready to become an investor, this guide is for you. You don’t want to spend all of your available money on one stock or get scammed by the fast-profit promises. You are standing in front of the huge world - investment market, and you need to make a first step.
The most crucial thing is to determine what kind of investment you want to start. The most recommended and popular one is of course the long-term investment. Immediate gains and short-term stakes may seem attractive at first, but in reality you will gain more choosing the longer investing process. Although, both options have their pros and cons.
Of course the length depends on the amount of time for which you are ready to not have your money available. If your goal is not consistent with investing your money for approximately five years - then long-term investment is not the thing you are ready for.
So, the first mandatory step is to determine your certain goal. Then, depending on it, the type and length of investment.
The second step is to find out your risk tolerance. Risk tolerance depends on the amount of loss you are prepared to handle while making an investment decision. If your risk tolerance is low, then you will more likely make conservative decisions and avoid high-risk investment. For example, you would not put your money into a high-tech start up until you are 99.9% sure that this project will be successful. In contrast, if you have a high risk tolerance, you will make more unusual and risky decisions. Both models are great, because the low risk tolerance investors are more wise with their money, but they are skipping the opportunities that unexpectedly blow up. And the high-tolerant investors are more frequently losing a lot, but they are the first ones among the lucky persons who won a jackpot.
How To Choose An InvestmentAfter you have found your place in the world of investors, the next - and the most difficult - step is to choose a certain investment you will put your money into. A lot of people are backing up at this stage, because they can’t bear a thought of spending the money on something so difficult and unpredictable. The best advice is - fear would not help you. The proper research will.
Surely, if you are already at this point, you do not want to lose even a cent. That’s why cautionary research is compulsory. Don’t be afraid to ask questions to your friends if they are already investing; to read reviews and the ratings of the particular investment platform.
There are a lot of banks nowadays that offer you a separate investing account, and even provide some kinds of insurance. It is always better to double-check, then to try to get your money back from scammers.
So, how exactly do you make an investing choice?
The most wise thing to do is to spread your money over several types of projects and investments. The experts and experienced investors unanimously agree with that point. This will significantly reduce your risks, because even if one type of investment fails, you will always have another one to back it up.
But do not divide your money into the really small amounts in order to cover every possible category of investing. That way your losses will be more than your gains, and the outcome will be unsatisfying. Try to define a limited list of options that seem the most attractive to you.
By spreading your money the careful way, you will always be sure to get a decent return even if some categories have decided to decrease.
Generally, the answer to “How to start an Investment?” is relatively simple. You need a little research about yourself and the market, the small amount of confidence and the patience.
This article has provided you the ultimate guide for starting - the rest of your investing career is up to you!