If you’re looking to do more with your money, there’s no better place to start than learning the basics of investing. By taking the time to know what an investment is and how it works, you can open up your world to a host of new opportunities that can help you build your future into exactly what you want it to be. Investing can be intimidating, and it can seem like something only reserved for the financially savvy. Although you’ll never be an expert, learning the basics of investing will help you feel more comfortable with the financial decisions you make each day—whether to put some money in a savings account or buy your favorite stocks and bonds. In this article, we’ll give you six tips on investing.
Do Your Research
Before you put your money into anything, do some research! Not only will it help you make better decisions, but it’ll also demonstrate that you care about what you’re doing. Know what you want and how much risk you’re willing to take, how different investment options work, and why investing is so important—especially for young people like yourself. If someone asks why you invested in something or why it was such a good idea, be able to back up your answers with facts and figures.
Know Your Choices With Investing
Before you decide what investment opportunities are suitable for you, it’s important to understand your options. You have four basic categories to choose from: stocks, bonds, mutual funds, and exchange-traded funds (ETFs). In each category, there are dozens of individual investments available. Your choice depends on your time horizon, tolerance for risk, and goals. There is no one-size-fits-all solution; we might need a more conservative option at some point in our lives than at other times.
The Earlier You Start, the More Time to Grow
The earlier you start, the more time your money has to grow and compound. If you’re just starting, chances are that even small gains can have a huge impact on your portfolio over time, even if they seem insignificant at first. If you want to start early, you can learn from the basics and start from the beginning itself. Take courses in undergraduate degrees like economics, business administration, finance, and statistics. The most affordable colleges offer these majors for less than $10,000 per year. These fundamentals will help lay the foundation for further study in finance or business. College is an ideal place to get involved with investing because everyone is fairly young, and there’s typically plenty of opportunity around campus.
Know the Terms Related to Investing
Whether you’re looking to invest a few thousand dollars or a few million, you need to understand all sorts of concepts and terms related to investing. There are comprehensive lists of common financial terms online essential for any serious investor. While reading through them, be sure to check out definitions for important terminology such as asset allocation, diversification, and risk tolerance. Once you understand these terms, take them with you when visiting your financial advisor. Ask questions until it clicks! Unfortunately, many investors make mistakes due to being unfamiliar with investment vocabulary. If possible, utilize your own time on google searching each term individually. Knowledge is power!
Watch Videos Explaining the Factors Influencing Your Portfolio
Many novices think that you have to be an expert to start investing. It couldn’t be further from the truth. Some courses and resources break down complicated financial terms and concepts into manageable segments for beginners like you! Remember, it’s about exposing yourself to new concepts, even if you don’t fully understand them all—you never know when these small pieces will come together into a greater understanding.
Additional Resources to Support Learning
To learn more about investing and basic finance, consider checking out other tools and resources. Investopedia offers a crash course on what stocks are, how they work, and why people invest in them. You can also check out Bloomberg’s tutorials which break down everything from value investing to securities trading to options. While neither sources are sufficient for diving headfirst into investment theory, both offer quick learning opportunities that may ease your transition into understanding more complex topics later on. Once you’ve become familiar with financial terms and lingo, sites like Reddit’s r/investing or podcasts like The Tim Ferriss Show can help you create an intellectual foundation for advanced study.
Even if you have limited knowledge and experience, you can still start investing as long as you understand these fundamental concepts. These basic ideas will help guide your investment decisions, giving you a real advantage over other investors looking at companies and assets from an uninformed point of view.