Six things every beginner investor needs to know


Once you have your finances in order then the next step you should take is making your money work for you. Lots of people miss out on maximising the amount of money they have because they don’t invest it. Ideally you should start investing as soon as possible. At first it can seem like a daunting process, unless you have done you research or have a friend to advise you then starting out can be tricky. It really does not have to be such a huge task, but it is worth investing a lot of time in because the value of your savings will increase a lot if you invest correctly, the intrinsic value of your investment is what is important to you. If you speak to anyone that has invested their money they will tell you that they were overwhelmed at the outset but the rewards that they have reaped have made their apprehension a distant memory. Here is a list of six ways that you can get started.

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Work out your goals

This can be a tricky question, either you don’t have any clear goals or you have too many! If you are not sure about your goals then here are some ideas; buying a car, buying a house, getting married, having children etc Work out what it is you are planning for.

Know what you are prepared to risk

This is known as risk tolerance and is often overlooked by people that are starting out and investing their money. You need to work out what you are willing to risk and how relaxed you are about certain risks. You need to work out your risk tolerance before you invest, you do not want to invest in something that exceeds your tolerance levels.

Short term goals

If you have short term goals that are usually less than two years then it is best to have your money in cash and invest it in the best bank account you can find. With the best interest rate being added to your cash, it is the safest way over a short period of time. If you invest your money then it is likely not to make you a lot of profit and is also open to loss.

Medium term goals

If you have more time to invest than two years, then a medium term investment of 3 to ten years is for you, you will notice much more gains by choosing this option. But, you should also remember that you are investing your money and there are risks attached to it, nothing is guaranteed.

Long term goals

If you can invest your money for a period longer than ten years then you will see a return on your investment. You can look through history to see that people who invest their money over a longer period of time usually make very impressive profit. The length of time means that you can ride out both good and bad times for investors and choose when the time is right for you to cash in.

Spread the risk

It is a good idea for beginners to invest their money in a low-cost index fund when they first start out. As you slowly learn the ropes and become more familiar with investing your money, this type of fund will allow you to invest a lot of different stocks at the same time. This means that your money is not all invested in one place, meaning that one company going broke will not lose all your money.