5 Best Tips For Investing Beginners

Investing is an important step. It ensures that you set aside money, let it grow, and work for you in the future. According to Warren Buffet, it is “the process of laying out money now to receive more money in the future.” However, investing beginners face several challenges and questions.

They do not know where to start, whom to ask for advice, and how much they must invest when they do. But, investing should not be too hard to begin. Here, we give five tips for investing beginners before they start investing.

1. Define what type of investor you are

What type of investor am I? This is the first question you must ask yourself. To define yourself, use your investment objectives for general guidance. Ask yourself if you want quick gains by getting in and out of investments or ‘positions’ or if you want to be a long-term investor. Also, ask if you want to manage your own investments or are willing to let someone or a company do it on your behalf for a fee.

More so, some investors are risk-averse, and some have an above-average risk tolerance level. Find out where you stand in terms of risk tolerance. As long as you haven’t defined the type of investor you are, wait on committing any funds.

2. Set your investment goals

Don’t just jump into the game without defining your investment goals. Why do you want to do it? How long do you expect to hold your positions? Which sectors are you targeting? If you are investing to grow your funds and buy a house, have it written down. If it is for a child’s college fund, have it clearly stated. You cannot just grow your money not knowing why you are doing it. Your investment goals must also include returns you are willing to take. Is it 5% per annum? is it a minimum of 10% per annum?

3. Choose your broker

These days everyone is talking about investing in one or more ways online. Internet memes are on overdrive, but unfortunately, the bad guys are also out, targeting unsuspecting investing beginners. As such, it is imperative to wisely choose a broker, be it online or your local ones that you can visit and talk to.

If it is an online broker, check if they are registered with their local jurisdiction, and if they trade in the markets you intend to invest in. Also, research them and see if they have easy withdrawal processes in case you want to withdraw your funds. Finally, if you are investing with a long-term view, you want to go with a broker who has got good reputation in the markets and has been in the game for some time.

4. Diversify

Diversification helps you spread your investments across several asset classes. This helps when unforeseen global economic pressures take place. Economies and financial markets are not insulated from global pressures, the best you can do is to insulate your own money through diversification. Also, diversification increases your chances of earning higher returns in your portfolio.

5. Ask for help

Many investing beginners want to rely on online reviews and opinions. That is a bad idea. Mix what you read online with what someone closer to you can share regarding investing. You may solely rely on online sources if you have no one you can talk to about your intended investing journey. Don’t be shy, otherwise, you will lose your money.