You might have heard about investing and thought, “That sounds like a good idea,” but then took it no further. It’s understandable. The investing world is intimidating and unknowable. The most you might even know about investing is a vague idea of the stock market, with visions of people standing in a crowded room with flashing lights, waving around pieces of paper. Or perhaps you take it back to the housing bubble crisis of 2008, and you associate investing as too risky and more of an activity for the rich. Unfortunately, this can result in a paralyzing fear that prevents you from taking further action.
We’re here to tell you that investing, no matter how intimidating or mysterious, can be worth it and make your time and money worthwhile. Here are a few tips to consider as you look into the world of investment:
1) Do your research
After all, you wouldn't buy the first car that looks good, would you? Same goes for investing. First off, are you looking to have someone invest in a small start-up of yours, or are you looking into investing in certain things yourself? Maybe you don't even know what you're looking for, but you've heard good things about investing and you want to give it a shot. Researching the topic will help you understand better what a 401(k) is, what a Roth IRA is, and what options are out there for you. You'll discover what best fits your own financial situation, especially if you don't have very much money to start off with. Luckily, the internet is full of information on how to invest, although it will take some studying on your part. Still, after you've studied it out in your mind, invest in what you understand. Understanding what you're getting yourself into is far preferable to losing money because you didn't take the time to learn.
2) As you research, acquaint yourself with the terminology
Understand what outstanding shares are. Learn to distinguish the difference between dividends and earnings per share. There's a lot of new jargon to get familiar with, and a good way to build your knowledge is to learn the vocabulary, and then look for it in everyday speech. Follow the trends. Most news outlets, including the New York Times and the Wall Street Journal, give data on how the stock market is currently doing. As you reiterate to yourself what each term means and how it applies to you and the companies you're interested in investing in, you'll gain a greater knowledge, and it will become more exciting.
3) There's an app for that
Just like there are many sites geared toward helping you understand personal finance, there are even more apps designed to give you investing tips and help you get started in the world of investment. Some apps will examine the market and report back to you its status, including trends and changes. Other apps will help you build your own automated portfolio as a beginner, in a user-friendly, fun, and interactive kind of way. Apps can help you in multiple ways, and soon the stock market will become less vague and more tangible.
4) Don't worry if you only have a small amount of money
In fact, it's better this way. Starting small means you know how to budget. Plus, if your investment ends up losing money, you don't lose nearly as much. Sometimes the learning curve is a bit trial and error, and when it comes to error, it's a scary experience. Even if you have no money, you can still start somewhere.
5) The sooner you start, the better - as long as you know what you're doing
We're not saying that starting investing in your thirties instead of your twenties will leave you full of regret. It is your money, after all, and you know your financial situation better than anyone. However, when you start investing earlier on in your life, it pays off even more as you get older.
Whatever you choose, the best choice you can make is to simply start somewhere. If nothing else, begin researching, and soon you’ll find yourself comfortably making investments.