If you have plans to start investing, the following tips will guide you on the new road of investing.
- Start with why you want to invest – People are much more likely to succeed when they remain focused on why they are pursuing a certain goal rather than simply focusing on the action steps to get there, therefore it is important you find out what are your “whys” before getting started with investing. Your ”whys” can be like: Are you planning to retire early from your current job? do you have plans to open your own business? Every investor has one or more ”whys” behind any saving and investment goals. This enable any investor to stay disciplined with his/her investment plans in the years ahead.
- Lay the foundation – Before going forward and opening that first brokerage account, make sure you have enough cash reserves set aside for any emergency, this can be like 3-6 months living expenses in an emergency fund. knowing you have money set a side to cover the unexpected expenses, will make it easier for you to remain disciplined with your personal financial goals.
- Avoid unnecessary fees – Avoid inefficiencies that drain money from your account. Be sure to limit how much you are paying an investment advisor for advice and how much you are paying in fees in investment products. Investing in low-cost exchange traded-funds and working with an advisor who charges you say 1% or less annually to manage your investments will keep more of your money growing toward your personal investment goals.
- Set a savings target – Setting the amount of money to invest depends on factors like the number and timing of your personal financial goals or your ”whys” that you have listed, how early you are getting started and how long you plan to work.
- Lastly tolerate short-term pain for long-term gain – In a year, you will find that a stock can experience steep gains, steep losses and everything in between. Though we don’t know what will happen in a single year, the market has always historically delivered a positive return over long time periods. While these historical returns are no guarantee of future returns, having a long-term perspective will enable you to capture the superior returns offered by stocks and bonds and achieve your personal financial goals. Join our Newsletter List.
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