If you know next to nothing, how do you go about the business of investing? The first thing you need to know about investing is, how much do you really know? If it’s not much, you’ll have to read a lot to educate yourself.
To be well informed, you need to read about the basics. Find out what a stock, bond, or mutual fund is, and what the differences are between these three financial products and their variables. Read books on financing and investing.
Talk to expert investors, watch videos and live presentations. Once you understand the differences and the risks involved in investing in each particular vehicle, you can move forward with confidence.
Now you can move on to the second phase of learning about investing. Get some experience investing in small stocks and learn from your mistakes as well as your successes. However, find out first what type of investor you are. Here are some tips to help you get to the answers.
As you go about your investment business, have a game plan and set clear goals. The answers to these questions will be valuable guides for you in your adventure of investing your funds.
o What is your timetable for investing?
o What industry sectors are you interested in investing in?
o What is the amount of funds that you can safely use to invest in order to reach your goals?
o Have you considered your short-term financial needs or goals?
o Do you plan to live on these investments in your retirement years?
Determine your investment style. Are you a risk taker? Or do you like constant profits? Consider this thought, will you be able to sleep soundly at night, knowing that your investment is going down and it will take a long period of time before it goes up? Or do you prefer to hand over your funds to a fund manager? Do you like minimal risks when investing your funds? Consider the type of risk taker you are, as this will help you choose the financial vehicles to invest in.
How much time do you want to spend investing in stocks? Is it just 15 minutes a day? Or do you find it the greatest entertainment to spend 7-14 hours a week reviewing financial statements and debating the merits of these actions?
Carefully consider the answers to these questions. By knowing what type of investor you are, you can play to your strengths and minimize the risks of the funds you’re investing with.
