So you want to start investing? Being a beginner in any field comes with great challenges, but it also brings new opportunities and knowledge. While going through the challenges, you should always keep in mind why you started in the first place. With investing, you start on a path to grow your money.
Some people never even start investing. They settle with what they earn, and some are actually happy not having to worry about an investment portfolio. That is not a judgment, not everyone can put their energy and money into investments. But before you decide if this is your case as well, let’s talk about why you should invest money and not let opportunities slip away.
Why You Should Start Investing
If you’re in a good financial situation, you might have savings and an emergency fund and feel comfortable staying at this level. But that does not mean you should settle. Think about it this way: even if you feel satisfied with your current situation, are you feeling good about your financial future?
Having robust savings accounts is a great thing, but investing your money can ensure it grows faster.
Investing does not only make you more money in the long term, but it also provides you with a financial safety net. It can guarantee you a future with less worry, more resources to live your desired lifestyle, and enough stability for your family and loved ones.
If this sparked your interest, let’s focus on the best investment plan that can help you invest your first $100 which serves as a solid foundation for long-term financial success.
Now, embarking on an investment journey may not be easy, so to help you get started, here are the best investment tricks for beginners to get started.
1. Analyze your finances before investing your money
Whether you are a first-time investor or just a beginner with a few investments in your portfolio, you should always analyze your finances before investing. It’s very tempting to fall into the trap of investing blindly with hopes of a high return on investment. This can, unfortunately, bring you into an undesired situation where you might get into debt to cover the money you just invested. So be very mindful of how you use each dollar.
2. Learn the basics and do your research
Investing has risks, like everything that we do in life. While risks are worth taking and every mistake helps you learn more about what you can improve along the way, you should be cautious in order to diminish unpleasant impacts.
Start with understanding the basics and terms associating with investing. Many get confused with terminology, asset classes, types of investment accounts, and choices between active investing and passive investing. You can do that by learning investing basics and by researching each opportunity before putting your money in it.
3. Consider taking an investment course
Learning is a never-ending process, no matter what field we’re talking about. Investments are no different. So while you can find a lot of online resources out there that help you on your investment journey, taking an online course can help you learn more faster. You can take an online course, like this one from Udemy.
4. Start investing as early as you can
If you are 20 years old and you think you should wait to become older before you start investing, guess what? You don’t have to because that is a misconception. The earlier you start investing the more you will see your portfolio grow to secure a financial future. You can start by contributing to an employer’s retirement plan such as a 401(k). Start small because you’ll have plenty of opportunities to contribute more to your portfolio in time.
5. Use a Robo-Advisor
Robo-Advisors are one of the best investment tricks for beginners. Even if you don’t have any knowledge about investments, a Robo-Advisor like M1 Finance, for example, can help you get started. Probably one of the best features for beginners is assessing your risk tolerance and being able to start investing with $100.
Read our list of the 5 best Robo-advisors for beginners.
6. Get help from a financial advisor
If you’re a beginner, you will have many questions and need assurances when the market goes through its ups and downs. A financial advisor can help you learn to understand your financial situation and investment goals.
7. If you want to go solo, use investment apps
Investment apps are an easy way to get started investing. With dozens of online brokers to choose from, you can keep track of finances in one place, invest in a variety of investment options such as single stocks, mutual funds, index funds, and exchange-traded funds. These investing apps can also keep you up to date with your investment returns and portfolio progress. Learn the difference between stock trading apps and Robo-advisors.
8. Dedicate a percentage of your income to investments
One of the best tricks to start investing for beginners is to automate a steady monthly amount from your paycheck into investments. Similar to automating your savings, you’ll want to automate investing. Doing so will help you grow your portfolio in a faster time frame and improve your rate of return.
If you keep going and you learn from each setback and challenge, you’ll go from being a beginner to a knowledgeable investor sooner. And to help you on your investment journey, here is a list we’ve made of the best micro-investing apps.
Here’s the thing: the sooner you start investing the better. Again, starting by contributing to your company’s 401(k) or similar retirement plan, invest through a Roth IRA, or open a taxable brokerage account to build your well-diversified portfolio.
Start small, if you need, but get started nonetheless.
What Beginners Should Invest In
There are many different types of investments, and each has its own pros and cons. There are many investment options available to you. The following are investing tips for beginners:
- Start by choosing a diversified portfolio of individual stocks and bonds. Consider an index fund and exchange-traded fund which are a basket of stocks.
- Investing is not easy, but if you do your homework, you will make money over time.
- You should invest in companies that have good products or services that people want.
- The stock market is volatile, so don’t put all your eggs in one basket.
- Don’t invest more than you can afford to lose.
Investing isn’t just for people who “have” money. Everyone can benefit from investing. And it’s an essential skill to create wealth.
If you are new to investing, you may find yourself hesitating to even get involved in it. That’s a natural response anytime we are confused about anything. But almost ironically, one of the biggest obstacles to investing is simply getting started.
With investing, big rewards will come over time. It’s not the glitz and glam you see in the news. Very rarely do people create wealth by buying the latest “it” stock. Most people create wealth with a steady, consistent, and passive approach to investing.
Investing is a great way to build wealth and achieve financial freedom. Understand investing success can only happen if you’re in the market. You don’t need to be an investment expert, you simply need to start.
And finally, you can certainly speak with investment advisors for investment advice and read books and articles.
FYI: A good starter book on investing is Broke Millennial Takes on Investing (Get it on Amazon or Audible) and Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market.