The Top Things to Consider as a New Investor

Last Updated on: 22nd November 2023, 12:12 pm

While investing is often recommended as the best way to grow your wealth and enjoy more financial freedom in the future, getting started with investing your money can often seem quite complicated, especially if you don’t have any previous experience. If you have been hearing or reading a lot about the financial benefits of investing and are considering getting started with it for the first time, it’s likely that you have a lot of important questions to ask, such as where you should invest your money, when to start, how much to invest, and where you can get the best advice before making a decision. You will be glad to hear that with investing becoming more of a popular way for the general public to grow their wealth, the amount of investing advice and help available today is on the rise.

If you know that investing your money is going to be a given in your future to help you grow your wealth, here are some key tips to keep in mind as you get started.

Start Early

Don’t wait around hoping for the perfect time to invest to come along – chances are that it won’t, since there really is no perfect time to start investing. If you’re waiting for this, then it’s likely that there will always be something that you might take as a sign to hold off investing your money just yet, which could lead to you potentially missing out. With so many different investment options available, it is often easier than you think to find one that will work well for you right now. And the sooner you get started with investing, the more potential wealth you are going to build.

Research Investment Options

When it comes to investing your money, there are several different options that you might want to consider, whether you want to invest in stocks and bonds or put your money into some of the most popular cryptocurrencies. You can trade Forex, other commodities, or even invest in real estate – the choice is yours. Since there are so many options to choose from and you will undoubtedly want to make the right choice for you, it’s a good idea to set aside some time for careful research before you finally decide where you want to start investing your money.

It’s advisable for new investors to choose one type of investment to start with that they can spend time learning about and becoming very familiar with before diversifying their portfolio. Stocks and shares are a popular option with investors, since there is a lot of information available about this type of investment that you can use to learn more. Investing in stocks involves purchasing a share of ownership in a company that is publicly traded, before selling your shares for a profit when their value rises. Wealthsimple offers a lot of advice about getting started if you want to buy stocks, including how to choose which stocks to invest in, where you can buy them, and what to do if the value of your stocks goes up and down. In addition, Wealthsimple offers automated investing tools that can help you get started.

Get Control of Your Finances

Once you have decided that you want to start investing and have come to a conclusion about the best investment type for you, it’s time to make sure that you are in full control of your finances. Since every type of investment that you will make can pose a risk, it is firstly important to set a budget and make sure that you are only investing an amount of money that you would be comfortable with losing. Never invest money that you are going to need to pay your priority bills or feed yourself! Along with setting your budget, it can be a good idea to pay down as much debt as possible before you begin investing. You can do this using the debt snowball method, where you pay off your debts from the smallest first and eventually use the money that you would normally put towards the minimum payment of the debts that you have repaid so far towards getting the biggest debts cleared. However, this might not always be the cheapest method if certain debts have higher interest rates than others, so you may want to consider the alternative debt avalanche method, which works in a similar way but starts with getting the highest-interest debts paid off first.

Determining Your Investment Budget

A huge part of ensuring that you are in full control of your finances is determining your investment budget. This is the amount that you are comfortable investing based on your ongoing income and expenses. You can invest as much or as little as you want in some investment types, while others will have a minimum investment requirement. Once you have determined how much you are financially able to invest and comfortable with, this may help you with making the decision of the best investment for you to start with.

Build an Emergency Fund

Before you get started with investing, building an emergency fund is an ideal strategy. Ideally, you should try and save enough money to cover your basic expenses for between six and nine months. An emergency fund offers peace of mind and keeps your financial risk levels low, especially if you want to use your investments to find a large number of purchases in the future or are hoping to use it towards your retirement. Since building a solid emergency fund can take some time, it is worth determining any strategies that you can take to reach your savings goals faster, such as minimising your ongoing monthly expenses and reducing your debt level.

Understanding Your Tolerance for Risk

Each investor will have their own unique limits and boundaries when it comes to the risks that they are willing to take. Regardless of the type of investments that you decide to make, one of the most important factors is ensuring that you only take on as much as you are able to handle in terms of risk. Taking on more risk isn’t always the wisest of ideas, even if you are able to afford it. It’s not only important to think about how much you can financially afford to risk, but to look at it from a personal perspective too, and think about how it might impact your mood and emotional health. Investing when you are feeling stressed and anxious about the amount of risk that you are taking is never going to be good for anybody. In fact, putting yourself in this situation will likely only result in you making mistakes due to the mental impact that it will have on you. It’s best to start your investing journey with a relatively low risk level that you might decide to increase as your confidence, knowledge and experience all grow.

Use Automated Investing Tools

Automating as much of your investing process as possible is a wise idea once you have decided what you are going to invest in and have familiarised yourself with your choice. Today, you can find a huge range of automated investment tools on the market that are designed to make the process easier for you. Automated investing is a great idea for anybody who leads a busy life and wants to make sure that their money is working harder for them behind the scenes. Automated software programs and apps will take care of the majority of the investing process on your behalf once they are set up to your preferences, that you will be able to go in and change at any time. In addition, you might consider savings accounts that along with allowing you to build your savings, will also automatically invest the amount of money that you save for you, giving it the chance to grow.

Get Expert Support and Advice

Investing your money can often feel complicated when you are first starting out, but the good news is that help and advice is available for you. You can find experts and investment professionals who work solely with investors to help them build their portfolio, choose the right investments for them, and make their money work harder. If you are serious about investing your money, you may want to consider working with a financial advisor or investments coach who can offer personal and tailored advice for your situation and your overall goals. In addition to working with an expert, you can also take advantage of lots of resources that are available for anybody who wants to start investing their money. YouTube channels, blogs, social media pages and groups, websites, and books are available in abundance to help investors at any level make better decisions when it comes to their money.

Investing your money is one of the best ways to grow your wealth by working smarter rather than harder. Before you get started, keep these tips in mind for making the best investment decisions and improving your chance of success.

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