The richest people in the world make their money in a variety of ways; however, one of the primary things they all have in common is making smart investments. Now, you don’t have to have a lot of money to invest, but you do need to be willing to put some of your money to work for you. First time investing tends to make people somewhat nervous, but that doesn’t have to be the case. Smart investing is not only for the rich.
Relax and take your time to decide what type of investing you want to do. To do this you have to know exactly what your financial goals are. After all, if you don’t know where you want to end up, then you won’t have any idea of where to start. So don’t rush into making an investment just for the sake of making one, but rather as a means of reaching a goal.
Once you have an idea of where you want to end up, first time investing simply requires that you make an overall plan. This isn’t as hard as it sounds. You already know your starting point and have some idea of where you want to end up, and making a plan is simply filling in the gap between those two points.
Consider how much money you have to invest right now, we recommend that you save between 6-9 months of income before you start investing. Put that money away in a secure savings account. That will serve as your emergency fund for the future in case you lose your income, etc. Once you get that taken care of you can start thinking about investing and how much you will be able to contribute to your investments. The more you invest earlier, the better. Consistently adding to your portfolio is a good habit and will give you a much bigger payoff when all is said and done.
Another thing you have to consider before investing is how much time you have to manage your investments and build a portfolio. If you are only in your 20s, then you have plenty of time to start building your portfolio (though you should get started as soon as possible) to allow it to stabilize. However, if you are in your 50s or older and approaching retirement, then your investment strategy as a first-time investor will be much different.
Time is not the only thing you have to think about though. You also need to have an idea of how much risk you can tolerate. No matter what anybody tells you, all investments come with some risk. Of course, some are riskier than others, but those are also the ones that have the potential of a higher payout. Regardless, you need to have investments that you’re comfortable with and make sense for you and your situation.
There is no doubt that first time investing can make people nervous. But there are professionals out there that can help you along the way. However, you should be well-prepared before you talk to them. Remember, it’s your money and your future, so it may as well be a prosperous one.