There are probably a million and one questions in the mind of a beginner investor. It can be anything from determining when, how, and/or what to start, to understanding the intricacies of a plethora of options out there.
The great news is: investing—despite its complexities—doesn’t have to cause analysis paralysis. So much so, that even you, a person who plans on investing your hard-earned money for the first time, can understand and—more importantly—start it.
We’ve talked to some of our friends in the business industry to share with you practical tips on how to begin your investment journey. Here are their responses:
My advice for beginner investors is to never stop learning. Educate yourself as much as you can regarding investing. This will ensure that you make decisions that’ll benefit you in the long run. Going in blind has never helped anyone so once you decide to start investing, so make sure you always keep informed and study your portfolio day by day.
The economic climate tends to shift easily and by studying it constantly, you can ensure that you stay on the right path and make the appropriate changes to your investments. I hope this helps you.
Diversify Your Investments
The number one tip for investors starting out stems from the old phrase “don’t put all your eggs in the one basket.” That’s true of the share market.
You need 20 stocks in a portfolio to be properly diversified, so when you are starting out it’s much safer to invest in a low-cost index fund to achieve great diversification with limited funds. These funds are low-cost because they don’t try to pick particular stocks, they just invest in the top however many stocks that make up the relevant index.
This is also a cheap way to invest and it’s far safer than putting your money in one or two likely stocks when you’re starting out. Similarly, it’s a good idea to diversify by trying to own both property and shares and acquiring your own home or an investment property can help achieve that.
– Rick Wallace, Founder, Navient Settlements
Keep Calm and Carry On
Don’t rush in. my push into the financial market was to pay up debt to avoid ruining my credit card score. But I failed. Horribly. I blew my account and lose my last few Grands in a single day. Well, this one lesson learned became useful when starting my copywriting service business.
Invest in yourself first. I mentioned blowing my account in just one day. Well, that big blow came from throwing my money in the market and trusting an RSI indicator to work the miracle for me. Thankfully, today, as a technical analyst and a serious Elliottist, I make money consistently no matter what financial instrument I’m trading. But this comes from all the forex trading courses I’ve bought, the webinars I’ve attended, and the countless eBooks I’ve read.
Be Observant. Being able to identify long-term investment opportunities and investing at the right time will make you profitable in the long run. Conversely, observe carefully and patiently enough to identify short-term opportunities. Just like with every other investment, just one trade can make you rich.
Cultivate Good Risk Management Skills. No matter what business you’re venturing into, always be risk-conscious. In fact, risk management is one of the most vital skills you can learn as a business holder, an entrepreneur, or an investor. Good risk management skills not only give your capital maximum security, but also maximizes your bottom line in the end.
Be Disciplined. The most difficult thing for me at first as a daytrader was controlling my emotions. But keeping my emotions out of the way whenever I am trading has enabled me to tap more into my psychological powerhouse, developed powerful trading strategies, and take guided investment decisions.
– Liam Clouds, Project Manager, MiTRADE
Study the Industry and Its Competitors
One thing all first-time investors should know before investing in any business is that it’s important to study the market. A business plan might seem great and with minimal risk, but that would all go to waste if the business itself has no edge against its competitors in a (most probably) saturated industry. You have to go beyond the meetings and study the market yourself. Ideas are great but none of that matters if that doesn’t translate well into reality.
Consider Investing in Real Estate
Here are a few of my tips for beginning investors in the real estate market that I believe will make the biggest difference for them getting started.
Don’t worry about how you are going to fund a deal. First, just focus on finding a good deal and then if you are successful, the money will find you.
Follow population trends. Look for areas where people are already moving and then find a deal in that area.
Avoid over-leveraging yourself. This is one of the easiest ways to get into trouble quickly and a mistake here can set you back several years.
– Omer Reiner, Co-Founder and President, FL Cash Home Buyers, LLC.
Have a Sound and Open Mind
Improving your psychology and patience will do better for you than studying any specific stock or investment style. The best investors are neither emotional nor confused. They’re able to be a contrarian and buy when others are selling. And they never follow the crowd into hysteria and panic. Because they’re settled in their strategy, seeing it logically, not emotionally.
– Brian Robben, CEO, Robben Media