What you need to know about investing.
Many new investors have a number of questions that they would like answered. Investing is a journey that should not be taken lightly because you will be putting your money into an endeavor you are not very sure will result in profits in the long run. Investing is not like putting your money to a savings account, where you know it’ll be safe. Investment is about taking a risk in something that you are not very sure about and hoping that you’ll be able to make some money out of it.
So, there’s nothing like a silly question when it comes to investing, and we will tackle some of them below.
How do I get started in investing?
The first thing you need to be clear about is what you hope to achieve with the investment, whether long-term or short-term. Are you saving up for a trip, to buy a car in the near future, or for your retirement?
Secondly, consider how much you want your involvement to be in the day-to-day running of your investment portfolio. Do you want something that requires your constant involvement or would you rather have something that you set up and forget about? For example, if you are saving for retirement you can just set up the account and on the day of maturity you get a notification and you can start collecting your returns.
What types of investments are there in the market?
You have so many investment options to pick from, one of the most common are stocks. For a beginner, you are better off going with index funds which invest in securities. Bonds are other types of investments where you give money to an organization or government and you get paid interest as well as the principal amount on maturity. While they may not offer very high returns, they are usually less risky.
You can also look at alternative types of investment for example real estate where you buy property and either use it for an income or let it speculate for sale at a later date. Commodities like precious metals or oils are also a good way of investing your money.
Is it advisable to pick my own stocks?
If you do not have the relevant competence or expertise, then you are better off getting an expert to do it for you. Stocks may also be tricky because you do not know how well a company will perform in the long run. You may, therefore, be better off trying other investment vehicles if you are new to the investment game.
What is risk tolerance?
This simply means how much you are able or willing to stomach in terms of investment. If you are worried about your investment options, it could be due to the fact that you have taken on too much risk. If you do not have a very high tolerance for risk, you should consider conservative investment options that will not keep you up the whole night worrying. Knowing your personality type is very important when it comes to investments.
If you’re thinking of going into investment, you will benefit from the wide knowledge available on the subject. Do not stop researching, and ask people who have been investing for a long time how they have managed to continue to be a part of the investment field.