Are you a newbie when it comes to investing money? If so the idea of putting your money into the stock market can be overwhelming, confusing, exciting and extremely addictive. Are you wondering how to invest your money?
If you have some cash saved up and want to invest here are some tips to get you started.
Don’t pay a fee
Just like anything in life there is no point in paying a fee until you’re sure you are happy with the service. Hiring an investment advisor or paying for a discount brokerage service is not worth it for first time investors. Paying a fee is only worth it if you’re making a profit that covers the fee and then some. If you’re starting out with a small amount of cash just do it yourself.
Research your options
You may be thinking, how can I do it myself if I don’t know anything about investing money? Well that’s a great question. You’ll do it the exact same way anyone does, you’ll learn. If you are looking to buy mutual funds or ETFs look at the fund facts. If the investment objectives match yours and the level of risk is one that you’re comfortable with then that may be the right investment option for you.
Talk to your bank
A good place to start learning how to invest your money is at your bank. Talk to a personal banker to get some recommendations and learn about the different types of options available when it comes to investing money for the first time. From there you can go home and research your options. Before you know it you’ll be on your way to buying your first investment.
Think about your comfort with risk
There are all kinds of different investments in the world. Some are high risk such as stocks and precious metals and some are low risk such as bonds and money market funds. Stocks are probably not the best choice for your first investment. Just because it’s called the stock market doesn’t mean you have to buy stocks. Stocks invest in one company and that’s a lot of risk for your first investment.
An alternative is to purchase mutual funds or exchange traded funds (ETFs). These are investments that purchase individual stocks and bonds to create one diverse investment. Purchasing several different mutual funds or ETFs within your account makes a well balanced portfolio.
Just do what makes you comfortable
You may be nervous about investing money for the first time, but don’t. At the end of the day you need to do what’s right for you and sometimes that means starting small and purchasing more investments as you become more comfortable over time.
Don’t jump into anything – especially with your money – before researching your options and seeking the advice of a professional at your local bank. Just remember that most investments aren’t guaranteed and therefore the value of your account will fluctuate day to day. How much it fluctuates depends on how comfortable you are with taking risk. That’s probably slim to none at the beginning.