Friday, September 25, 2020

Investing for Beginners

 If you have never invested money in anything before, it can feel like an extremely scary prospect. Just knowing and understanding some of the basics can go a long way towards making it feel a lot more manageable. While we can’t give you every little detail in this short blog post, we can give you some of the broader themes that will hopefully make investing feel like it is a realistic possibility for you.

Pay Off Debt 

Before you go any further down the path of investing, you should aim to pay off any pre-existing debt. Of course, many people have student loans and mortgages, which are perfectly normal, but it is the high interest credit card debt which can really act as a weight around your ankle. If you leave these debts to accumulate, the money that you make investing will be reduced significantly. So, try to avoid the common trap of buying more than you can afford. Only use credit cards in emergency situations and save money for your major purchases rather than using cash that you don’t have as yet. 

Create an Emergency Fund 

Your next major investment should consist of making an emergency fund that you can dip into should times get tough. Ideally, you should aim to save around three to six months of living expenses. The global coronavirus pandemic is a clear example of the kind of emergency situation that can have a big impact on your livelihood. Even if you don’t need to dip into it, the fund is always there, providing peace of mind and a sense that you have a safety net waiting to catch you should you need it.

Learn the Ropes 

Before you rush to put your money into a specific stock or share, you should learn the basics of investing. Look at the different options available to you. People most commonly turn to the stock market as a starting point, but there are also investments like gold, so check out Nuggets By Grant. There is plenty of free information available online, as well as paid seminars and webinars. You can also get a feel for investing by using ‘play’ money and seeing whether your investments go up or down. 

Create an Investment Plan

You should now feel more comfortable in creating an investment plan. Start by assessing your current financial standing, before defining clearly what you want to accomplish. Your next step is to determine how much risk you can afford to take, before making it clear what type of investment you want to make. You should also have a timeline of how you envisage the situation developing. While you want to be ambitious, you still need to set realistic and achievable goals. Ultimately, these are much better than ‘pie in the sky’ figures which you are unlikely to hit.

While there is plenty more that could be written about investing, this guide gives you a good general overview of how to get started and develop your portfolio.

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