Investing for the first time can be confusing and intimidating. But reports of quick fortunes being made are enticing, and planning for your financial future is important. Start with the knowledge that fortunes are not typically made quickly, and investing doesn’t have to be complicated or scary. Take some time to read about investing options, and make an appointment with your banker or financial advisor to answer your questions.
First, decide how much money you have to invest. This should be money you won’t need in the short term, and be aware that with investments, there is always some risk of loss. If your employer offers a retirement plan, sign up for that. If they will match all or part of your contributions, that’s free money for you, and typically a very simple way to invest for the future. Deductions can be made directly from each paycheck, and if you start with 1-3%, chances are, you won’t even miss it! Talk to the administrator of the retirement plan about your future plans, and it’s ok to ask lots of questions! You should always understand where your money is, and what is being done with it.
Maybe you’ve just received an inheritance, and want some professional advice. A financial advisor will sit down with you and discuss your plans for your future. Choose someone you trust and someone who will answer your questions. And keep asking those questions until you understand the investment process! Investment choices could include Mutual Funds or Exchange Traded Funds. They contain a large number of stocks and other investments, making it easy to diversify. If you’re young, you may want to invest in aggressive growth funds, which offer higher returns at a higher risk. You should have lots of years to make your investment grow. If you’re starting to invest later in life, moderate or conservative options might be better choices, as they carry less risk for loss.
If you’re wanting to try your hand at investing on your own, there are online brokers and investing apps that can help you (here are a few apps to check out). Shop around and do lots of research. Be sure to read reviews, and be aware of the trading fees, commissions, and minimum deposit requirements. Robo-advisors are online options that use algorithms to calculate investment potential, with minimal human interaction. Read up on the trends, and if you’re wanting to invest in individual stocks, research the history of those companies’ growth. The old adage “don’t put all your eggs in one basket” may have been born out of an investor who put all their money in one stock, only to lose it all. Knowledge of the process, information on the stocks, and diversification of your investments can give you more confidence to take your future into your own hands.
Regardless of how and where you invest, know that the stock market can fluctuate on a daily basis, and checking your investment balance every day may feel like riding a roller coaster. Read through your quarterly reports and if the results are not what you were hoping for, talk to your advisor about making changes. Investing can be intimidating. But armed with enough knowledge and expert advice, it can give you a sense of security for you and your family’s financial future!
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