When it comes to maximizing financial opportunities, investing is right up there with some of the best strategies. But contrary to what you’ll hear online, investing is very difficult.
Investing comes in many forms. From the traditional method of buying stocks to the newest method of buying cryptocurrencies and everything in between, investing presents a huge sea of opportunity. Due to the sheer amount of information online, investing can either confuse you or make it very easy and convenient.
But regardless of what you plan to invest in or how you plan on doing it, it’s important that you do it right. So that’s why we’re here to give you our investing tips for first time investors. With all that said, let’s start.
Always Go With A Plan
Planning is key for the success of any investment strategy. Without a plan, you’ll be losing more money than what you’ll be potentially making. That’s not to say your investments will go down, but you could make a lot more money if you go in with a formulated plan.
Whenever thinking about it, always remember these few things:
- How much can I invest?
- How much can I afford to lose?
- What is my ultimate goal in all this?
- How long will it take me to reach my goal?
- Do I understand the area that I plan on investing in?
- What’s my exit strategy?
Answering these questions will help you formulate a good starting plan.
Understand That Risk Will Always Exist
If investing was a bulletproof strategy to making money, everyone would be doing it. The sad reality is that there are winners and losers when it comes to anything in life. We can’t all be winners, but we can at least give ourselves a bugger chance to be a winner than to be a loser.
One way to do that is to familiarize yourself with the many risks that come with such an endeavor. Every person will look at this one differently. Since we’re all different and we have different risk tolerances, losing 100$ might not mean anything to you. But it could mean to someone else.
More so, not everyone packs the same financial power. Some people can afford to invest $100.000, while others can only afford $100. But what everyone shares are the risk of losing their investments. Regardless of what you plan on investing in, do make sure you are fully aware of the potential risks involved. The last thing you want is to invest too much money that you’ll end up in debt.
Always Diversify Your Portfolio
We’ve come to a point where everyone should diversify their portfolio. Why is that? Well, if wealthy investors can diversify their portfolios, then so can you.
You might feel insignificant in this huge sea. You also might feel your $100 aren’t enough to diversify your portfolio. But there will always be a way to do it. By diversifying your portfolio, you are drastically minimizing risk. If you invest all of your money in a single stock and that stock fails, then you’ll lose all your money.
Make no mistake about it, not diversifying your portfolio is a rookie mistake you would hate to make.
Stop Listening To Gurus
Everyone wants to make money. More so, everyone wants to make money the fast way. People go to such extremes that they take out personal loans just to invest and make a quick buck. But this is something you absolutely do not want to do.
You might find a person on Instagram or Twitter that promises to double, triple, and even quadruple your money. But there is always a catch. If the person asks you to pay for investment tips, then that’s an instant red flag. These so-called “Gurus” prey on rookie investors who have no idea what to put their money into.
They’re con artists that give “signals” on what to invest in next. You should absolutely avoid them as chances are you’ll lose all your money. While there is no harm in trying out some of these tips, beware whenever these so-called “gurus” ask for you to pay for their service.
Always Take Profits And Reinvest
At the end of the day, the successful investors are those that take profits and reinvest. If you invest $100 in a particular stock and manage to make $200, take out $100 and reinvest the remaining money. This strategy might not appeal to everyone, but it is a safe strategy nonetheless.
Some of you are maybe in it for the long run, but the only way to be safe is to get the return on your investment, take profits, and reinvest. History shows us that reinvesting after taking profits is a vastly superior method of investing.
Finishing Thoughts
The world of investing can be confusing and difficult to understand. But luckily for you, there are dozens of ways to make sure your plans go the way they should. But to do that, you will indeed need a plan to begin with. So we hope that our 5 tips for first-time investors will help you do just that.