By Emma Jackson
I have to be honest, before doing my research I knew nothing about investing. And I do mean nothing. I’ve never been good with finances so it makes sense that I’ve never even considered investing money into anything. It was interesting, though, learning about investing in stocks for the first time. It has made me wonder if investing might actually be right for me after all. With these 9 tips from Money-wise, you might find that investing your money into stocks might be right for you as well.
1. Investing isn’t just for high rollers
You don’t have to be filthy rich to invest in the stock market. That’s definitely something that I learned from doing research. I thought investors were all wealthy individuals who threw down thousands at a time into the market but that’s not true. You can invest as much or as little as you want. If you don’t know where to begin, start by finding a financial advisor to help assist you in making the wisest investments.
2. Beware reckless caution
Gambling of any kind can be nerve-wracking. This can be especially true when it comes to the stock market. Stocks are constantly rising and falling in value daily. Research before you invest so you know the trend of what you are about to put your hard earned money into. Investing is long-term. Be prepared to lock your money away for a minimum of 5 years.
3. Think about what you want to invest in
Cash is typically viewed as the least volatile asset class. Your money is protected if the banks go under. Fixed interest investments, also known as loans to companies or governments, provide reliable returns to the investor. They are also regarded as lower risks than equities. Shares or equities offer stake in a company. They typically rise in value when a company is doing well, and fall in value when it is not. You can also invest in things such as property funds, or commodities such as steel, oil or gold.
4. Don’t put all of your eggs in one basket
If you funnel all of your money into shares in one company, you will lose it all if that company tanks. You should divide up a lump sum of money and invest portions into varied companies instead. That way, if something happens to one company, you still have others to fall back on and you won’t be out all of that money.
5. Think about investing through a fund
You can buy shares of a company directly, but this could be difficult, not to mention risky as well. For a beginner investor, it would be better to invest through a collective fund. A collective fund offers an affordable way to buy different assets without the hassle of making your own investment decisions. In a nutshell, you buy units, which are then pooled with others, and a fund manager buys and sells shares on your behalf. This could be a great option for someone like myself who doesn’t know much about the stock market.
6. Spend time choosing the right fund
You need to do your research before choosing the right fund to invest into. It’s important. This is your hard-earned money that you are trusting will be taken care of. Pick a fund that meets your financial needs and isn’t too risky for your liking. Remember that this is a long-term investment. Monitor some funds over a long period of time to verify performance before just jumping in to investing.