Investments can really be intimidating for first-timers. Compared to putting your hard-earned money in a savings account, investing requires more than just your money. Investments involve critical decision making, strategy, and responsibility.
Here are five things every first-time investors need to know that can help in your investment decision making and can ultimately help grow your finance.
1. Your risk tolerance plays a vital role in decision making.
Risk tolerance is the degree of uncertainty or variability you are willing to embrace as an investor. All investments involve some degree of risk. You should acknowledge your ability and capability to venture and take on these risks.
Your risk tolerance serves as your investment limit. Identify risks before making any investment and see if theyre within your risk tolerance.
2. The earlier you start the better.
Take one step ahead of everyone else. Investing early opens more opportunities and time to learn more, experiment and grow your money more as you grow old.
Unlike those who invest later in life, you are capable of earning the interest of your investments early on. Instead of paying out, you can reinvest interest compounding interest returns. This way, you can continuously grow your finances over time.
3. You can personalize your investment portfolio.
Your investment portfolio is the record of assets you own stocks, bonds, property titles, cash, etc. It is a collection of investments. The typical investment portfolio is created based on an investor's expected return, risk tolerance and level of equity.
An investment portfolio does not have any standard legal structure. Personalize your portfolio and let it tailor to your objectives, goals, risk tolerance and unique life circumstances.
4. You don't always have to wait for a long time to yield investment returns.
Investment can provide you passive income (money earned while doing nothing much). Different stocks or bonds offer monthly or quarterly dividends: your share in the profits. The larger the investment the larger dividends, more earnings.
5. There are different kinds of investments for everyone.
Each approach on investments has their own ups and downs so your level of knowledge and confidence in making investment decisions play a big role in your choice. Here are a few types of investments to choose from.
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- Real estates buying a property then renting out or reselling. Not everyone is cut out for this kind of investment but its one type that offer great returns when successfully executed.
- Stocks buying stock shares from other companies. Considered to be one of the safest and easiest way to grow your money, stock investment requires research and a dedicated investment fund so youre not anxious about your shares and can wait for them to grow. . You should be smart in choosing where and how much to invest.
- Mutual funds pooling money from other investors and investing in securities such as stocks, bonds, etc. Mutual fund is a good choice since it allows flexibility by shifting fund between various investments. There's also a professional investment management that handles the funds.
- Peer-to-peer (P2P) or Margin Lending with this kind of investment you can lend money to individuals or businesses. As a P2P lender, you are investing your money on other people's goals. Margin lending also allows you to get your money monthly or quarterly.
- Starting a business one of the greatest investment with long-term returns. It requires skills, knowledge, hardwork and effort. If executed and managed correctly, your business can outperform any other types of investments.
With investment, you can unlock more opportunities and avenues to grow and develop your finance. Investment starts with careful planning and wise decision making. Acquiring and applying all the right knowledge help ensure a successful and fulfilling investment.
Money is not just a word, its a language. Learn the language you speak, or youll sound ignorant. And even in an abundance of water, the ignorant still die for thirst. Garth Vickers, The Wealthy State of Mind
Advice from family and friends can only take you so far. Expert advice and resources on the other hand can provide you with better peace of mind, and a better overview of what to do and expect when investing for the first time. Join the waitlist for my upcoming course for a step-by-step training to grow your wealth.
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I’m a 7-figure business startup consultant, best-selling author of “The Wealthy State of Mind,” and international motivational speaker, with a passion for helping entrepreneurs achieve success in business. Using the methods I’ve developed from helping businesses achieve success over the past 10 years, the Entrepreneur Academy was born. Inside, entrepreneurs are taught the fundamentals of building a successful and profitable business based on real-world tactics that are responsible for generating millions of dollars in business profits.
