When you’re just starting out in investment, the idea of trying to grow your savings can be as scary as it is exciting. You know that if everything works out well, you’ll be in a more secure financial situation. You may be able to pay off some debts, set up your future, or even just meaningfully supplement your ordinary income. However, everything working out well is not a certainty, and there is always apprehension that comes with putting your money anywhere it has the potential to disappear.
Unfortunately, no one can solve this problem. Every investment, even the Intuit stock, carries a risk factor, and therefore an element of fear or uncertainty. But by using the following tips you can set yourself up for success by developing a proper investment mindset.
1. Research Investment Methods
There are three main ways for beginners to invest in the stock market. The first and most conventional is to choose a professional broker and set up an account through which you can buy and sell stocks on your own. The second, and often most recommended for beginners, is to put your money into a mutual fund, where a professional manager will put it to work for you within a proven (but not guaranteed to succeed of course) portfolio. And the third and newest is to start with mobile apps that allow for easy personal investing with low fees and low starting points for portfolios. The most important first step is to figure out which of these methods may best suit your schedule, habits, and goals, and go from there.
2. Diversify From The Start
Most experts agree that diversification is the key – or, at least, one of the keys – to a net gain in your investment portfolio. Putting all of your money behind a single stock, or even behind stocks in a single industry, leaves you vulnerable to any sort of crash that might affect that industry. However, spreading your investments out across unrelated stocks, so long as all of them are strategically viable, gives you better odds of seeing a net profit.
3. Be Prepared To Set Lower Limits
Every investor should recognize that in most cases, people hang on to losses longer than they should. There’s a certain stubbornness that comes with trusting your money in an investment, and it can be hard to admit defeat. However, the most disciplined and successful investors overcome this instinct and learn to set lower limits at which they’ll pull out and cut their losses. It can be hard to make yourself do, but it’s the best way to avoid significant losses.
4. Keep A Close Eye On Fees
No matter what type of investment you decide to go for, it’s always a good idea to keep an eye on the fees. It costs money to make a trade, and this can come as a surprising burden to those who are just jumping into the stock market for the first time. It’s important to factor these fees in as additional expenses when you’re planning your portfolio.
Figuring Out How Much To Invest
You may be wondering how much money you need to invest. That is a wonderful question, and a great place to start. It means that you are aware of your limitations, which is crucial to successful investing. First determine your risk tolerance. If you just want to get a taste of investment, $500 will do. However if you really want to throw yourself head first into trading, you are going to need at least $1,000. $5,000 would be even better. Just be sure to keep the advice we gave you above in your mind. Do not spend more than you can afford, and make sure you have your three month safety cushion before you start investing. Then, go ahead and invest $500, $1,000 or even $5,000, as long as you are comfortable with it.
With these four tips on your side, you’ll better prepared to begin investing. Good luck!