Are you looking to get started with investing in your future? Getting started Is the hardest part. It can be very overwhelming and if you are new to it, you don’t necessarily know where to start.
Understand Your Finances
Before you start investing, you need to sit down and look at your financial situation. Understanding what your financial situation is and how much funds you have available to invest will help you make the best decisions on when to start investing.
Know Your Goals
Knowing what your goal for the money you are investing is will help you pick the right type of investments. Some investments are more easily liquidated that others are, planning for your cash needs 12 to 18 months in advance will guide you to the type of investments you should make.
Know Your Risk Tolerance
There is a degree of risk in any investment, however understanding how much risk you are willing to take will also guide you in the direction of the best investment strategy for your personal situation.
If you intend to purchase securities (things such as stocks, bonds, or mutual funds) it is important that you understand before you invest that there is a potentially greater chance you could lose some or all of your money. The money you invest in securities typically is not federally insured; this means if something bad happens you are not protected from losing you money.
Diversify Your Investments
One of the best ways to lessen the risks of investing is to diversify your investments. Remember the basic rule of not putting all of your eggs in one basket. By including asset categories with investment returns that move up and down under different market conditions within a portfolio, you can help protect against significant losses. Historically, the returns of the three major asset categories (stocks, bonds, and cash) have not moved up and down at the same time.
Avoid Circumstances That Can Lead To Fraud
Often, scam artists use highly publicized news headlines to lure in potential investors and make their “opportunity” sound more legitimate. The SEC (Securities & Exchange Commission) recommends that you ask questions and check out the answers with an unbiased source prior to making an investment. The best advice we can give is to take your time and talk to trusted friends and family members and before investing. The market is not a sure thing, it will go up, it will go down and it will continue to do so. Understand this before investing and you will start out on the right foot.