So, you’ve decided to try your hand at becoming an investor. Good for you! Not everybody is brave enough to take the step that you’re deciding to take. Most people prefer the security of knowing where their money is, and knowing that they don’t stand to lose any of it unless they spend it. Putting your money on the line in the hope of making more is a bold move, and not everybody’s cut out for it. For those that are and can do it successfully, it’s often the key to a whole new lifestyle – one that involves you being a lot richer!
Before we go any further, we should point out that there’s no such thing as a safe investment, nor any guarantee that investments will ever pay off. For all the complex language and mechanisms around the topic, investing is only a little safer than spending your money playing games on an online slots website such as MoneyReels.com. Speak to a few online slots players, and you’ll find all of them have good luck stories, but they’ll also be able to tell you of times when they span the reels for hours on end, and nothing came up for them. Just like you can’t ask for a refund when your lucky symbols don’t come up at an online slots website, you can’t get your money back if an investment performs badly. That’s why it’s vital that no matter what you read here, you speak to a professional adviser before making any potentially dangerous financial decisions.
Now we’ve got that out of the way, let’s start talking tactics. There are a few things you should know when you’re starting out with investments – and here they are!
Ignore The Media
Every day there’s a negative story about the stock markets or investment somewhere in the world. Controversy and panic sell newspapers, and so newspapers will always publish stories that sensationalize things. The entire stock market has been supposed to crash every year for the past five years, and it hasn’t happened yet – not even in these spectacularly turbulent times. The media will tell you a stock is about to go up or down, and sometimes they’ll be right. It’s just as likely that they’ll be wrong. The only person whose advice you should be listening to is your financial adviser’s. Find yourself a good one, and make changes to your portfolio only when they agree that it’s a good idea. Don’t be swayed by articles written by people with biased agendas.
Identify Clear Goals
You need a clearer goal than just “making money” when you get into investing. What would you like your portfolio to look like at the end of your first year? Where would you like it to be five years from now? How about when you retire? All of these are questions you should be asking yourself right at the beginning of the process. Connect your goals to tangible objectives. That could be a dream holiday or a car you’ve always wanted to own. By having clear objectives, your financial adviser can work with you to make them happen. If all you have is a vague intention of making money, there’s no way to measure your success or failure, and your adviser may struggle to pin down a tailored plan for you.
Work Our Your Attitude To Risk
Knowing a client’s attitude to risk is essential to every financial adviser, so you need to work out yours. Just the fact that you’re willing to get involved in the markets at all is a sign that you’re happy to take on a few risks, but the risk tolerance of some people is much higher than others. Would you be happy to risk losing almost all of your money for a chance of trebling it in a short space of time, or would you prefer to miss out on that chance and allow your profits to build slowly and steadily instead? What do you stand to lose if an investment fails completely, and are you OK with that? To put things another way (and linking back to the online slots metaphor we used earlier on), are you a gambler? Your portfolio should reflect your attitude to risk, and your attitude to risk should reflect your personality. Everything should work in harmony.
Beware Of Fees
Your financial adviser will charge a fee, and that fee is usually money well spent. Beyond that, beware of fees. There’s generally a fee attached to any investment fund, and some fees are much higher than others. A ‘managed fund’ (your adviser should explain this concept to you is more costly to get involved in than an ‘indexed fund.’ Generally speaking, fees are charged as a percentage of profits or as a percentage of your original investment. If your holdings increase by 3% per year, but you’re losing 1% of that in fees, you might want to adjust your holdings so that you’re not being penalized so heavily for your success. Make sure you have a very clear understanding of all fees before you commit to pumping your money into a fund. There’s nothing worse than believing you’ve made big gains only to realize that half of the gains have been swallowed by fees.
Far too many would-be investors spend months or even years holding off for the perfect time to invest. It will never arrive. It doesn’t even exist! There are always pros and cons to conditions in the market at all times, and that will always be the case. There will always be risks to navigate, but there are also always profits to be made. If you have money to invest and you’ve made the decision to spend it, the best time is right now. Tomorrow conditions might be worse, or they might be better. You might lose money in your first year, or you might make money. You might find out that you hate the whole process, and you never want to do it again – but at least you’d know for sure! Take a deep breath, get on the phone to someone who has the skills and qualifications to help you, and start the ball rolling. It’s the only way to find out whether investing is right for you or not.