If you are delving into the world of investing, the complicated terms fly around your ears. But there is good news: you can make investing as cumbersome and as risky as you want.
7 tips on investing for beginners
Only invest with money that you can afford to lose
You’ve probably heard this tip before, and it feels a bit crazy. The money you can spare? Wouldn’t you rather have more money than less? By this, they mean that you have a substantial financial buffer when you start investing.
Make sure you have enough in your savings account for a beautiful life.
Invest in the long term
When people think of investing, people often think of investing in the short term first – you see this a lot in movies. Here you buy shares that you expect to increase in value in the short time and then quickly sell them again. With a profit, of course, you hope.
In theory, you can earn a lot of money with this investment strategy. However, we recommend investing in the long term. In a short time, it is a lot riskier.
You have to constantly keep an eye on the stock market, and we don’t think that is good for the heart. If you invest in the long term, setbacks will be less bad. You hold them. For example, is it time to close to retirement? Then you keep a close eye on the price, and you only sell at the right time.
Spread, spread and spread again
You don’t want to bet on a losing horse, do you? That is why you spread your investment on several horses. Even if you have done excellent research and are firmly convinced that the company will do even better in the future, you should never put all your money into, say, one stock. Things can still happen that you can’t see coming—legislation that changes, for example, or a scandal.
Therefore, always spread out between different sectors, industries, and countries. If you choose to invest in index funds or ETFs, you are investing in a basket of sometimes thousands of other stocks and bonds. That is why this type of investing is very suitable for beginners.
Spreading is also possible in the time
Nobody knows in advance what the ultimate moment is to start investing. But if you invest periodically, it also matters a lot less. Instead of investing a large amount once, you invest some money every period.
So it is a big misconception that you need a lot of money to get started and that you have to put it in all at once. You can invest with, for example, twenty dollars per month.
Beware of scammers
We can be brief about it: if you don’t trust something one hundred percent, don’t do it. If someone comes up with an investment proposal that seems too good to be true, it probably is. Check online to see if they have not issued a warning about the seller who is trying to sell you the beautiful story.
Watch your costs carefully
Investing costs money, even if you have a positive return. This way, you pay money to your bank or broker when you make or sell a purchase. These transaction costs differ greatly per bank or broker.
Find out where the cheapest is for you. For example, 0.1 percent difference doesn’t seem like much, but if you invest for decades, this can ultimately save you thousands of euros.
Do your research
Okay, investing may not be as complicated and scary as people often think, but the fact remains that you can lose your investment. As you can see from the tips above, there are plenty of options to reduce your risk, but it is wise to immerse yourself in the world of investing before investing your hard-earned money.
Another free tip from investor Warren Buffet, aka one of the wealthiest people in the world: only invest your money in what you understand and what you have an affinity with. Especially if you buy a share, you will have to delve into the scalability of the capital, the business results, the market and the sector, and the company’s position in the market.
That sounds like a lot of work, but you’ll see that the more you dive into it, the more fun it gets. Isn’t that the case? Then it may be that investing isn’t right for you. And that’s okay too.