With inflation and the cost of living at all-time highs, you might be considering adding investing to your financial plan. Whatever boat you find yourself in, investing is probably right for you. But, if just the thought of trying it leaves you feeling totally out of your depth, I hope this guide can help you feel equipped to dive in!
What is “investing”?
Investing is the act of spending or depositing money with the expectation that you’ll gain a profit. The key word here is “expectation”, as no type of (legal) investing can guarantee you a positive return every time. Avoid giving your money to anyone who tries to tell you otherwise.
Investing inherently comes with a risk of loss. The degree of that risk will vary depending on the type of investment you choose, but that risk is never zero. There is no such thing as a sure thing.
What do you need in order to start investing?
To become investor-ready, you need money that you are prepared to lose, and time to let that money grow.
The real appeal of most investments it that the gains compound with time. This means that if you allow an investment to grow for ten years instead of five, you will likely have more than twice the profit even though you only doubled the time.
When should you start investing?
There is no better time than the present to start investing! With every day you let pass, you risk missing out on the compounding profit we discussed above.
What should you invest in?
Not all investments are created equal. They can vary in the degree of risk involved, the required upfront capital, and the amount of effort you’ll have to put into managing them.
If you have a lot of capital and are looking for an intense side project, you could consider investing in real estate. You can either manage the properties yourself or hire a management company to oversee them. If you have a lot of time but not so much capital, you could consider day trading or forex (foreign exchange) trading. These types of trading require you to constantly monitor your stocks in order to accumulate short-term gains.
If you’re low on time, a robo-advisor may be your best bet.
And of course, no investment advice would be complete without a recommendation that you invest in any retirement accounts (401k, IRA, etc.) you may be eligible for.
Well, this was helpful, but…what do I do now?
If you’re convinced investing is your best way forward, decide on the investment pathway that best matches your situation. Once you’ve chosen a lane, take some time to do a deep dive into how best to get involved. Then, pick the platform, advisor, or channel that most speaks to you, and get started!
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