Investing is one of the fastest ways to build wealth. If you’re not an active investor, or perhaps the idea has never crossed your mind, 2020 is the year to set the resolution to move forward and start building your financial future.
For many, the idea of investing seems intimidating. You don’t have to be an expert in stocks, bonds or the finance field to start investing. You don’t need to start with a lot of money either.
Save and Pay
While you don’t have to start investing with a six figures bank account, it is helpful to have money set aside so you can start with a quality nest egg. If you don’t already, start a savings account and put away a small bit of money each week. This will quickly build and start a fund for you to put toward investing.
It is also important to look at your debt and cash flow. Before you invest, erase high interest debts, such as credit cards. It makes almost no sense to be investing money when the payout is less than the interest you are being charged on credit card debt. Minimize your debt before diving into investing as much as possible. By knowing how much money you are taking in each month and allocating it appropriately, you’ll be able to get a better hold on your cash flow and will be able to invest more responsibly once that debt is paid off.
Have a Plan
Set goals for your investing. What is it that you want to accomplish and on what timeline? Do you want to put funds into a lower risk account, such as savings bonds and certificates of deposits, and wait out the return? Or risk it with a higher return on investments like hedge funds and real estate? The greater the risk, means the greater the return, but can also end with greater investment loss.
Research the type of investment you are interested in. Determine the company’s stock market history, look at current news and whether or not the company’s return aligns with your preferences – such as if they company pays out dividends or not. The internet has an extensive amount of resources to learn more about what and how to invest. Do your research and make a plan to follow the goals you want to achieve even if it is setting 10 minutes aside each day to learn the stock market.
Turn to an Advisor
If you’re still unsure how to get started building your wealth through investing, look for an advisor. Today, there are programs offered online to help teach interested investors the basics. There are also robo advisors that can assist in buying and selling stocks while providing insight. There are plenty of options and verified resources that can launch your investments.
Invest and Diversify
Once you have learned enough information and made a plan, it’s time to actually start investing. Find your comfort zone of holdings to add to your portfolio to align with your plan, goals, risk tolerance and time horizon. Make sure there is a mix of variety in investments as this will work to yield higher returns and pose a lower risk for any individual investment.
This year, take control of your finances or launch the investment opportunities you’ve always dreamed of by building your wealth. Make a resolution to learn and try investing this year, so once next year approaches you will be equipped with investment knowledge and hopefully a bit richer than you are today!