Are you interested in investing but don’t know where to start? If you answered yes, you’re not alone. More and more young adults are becoming curious about investing in their future, but there’s so much information out there that it can be overwhelming to take that first step.
What is investing? Who is it for? And are there any risks? These are some of the important questions that I’ll be answering in this beginner’s guide. By the end of this post, you’ll be able to understand the basics of investing and decide whether or not it’s for you. Here are 7 basic things to know about investing.
1) What is investing and who is it for? Investing is the process of purchasing assets in the hopes that it will increase in financial value overtime. Anyone can start investing, especially since it’s being made more accessible for beginners.
2) What should I consider before investing? Some key things to consider before investing include your current budget, outstanding debts, financial goals, objectives, and risk profile. Are you hoping to retire by a certain age? What types of investments will help you meet your objective? Do you have an emergency savings fund that can assist you in the event of a loss?
3) Is investing for short-term or long-term goals? The answer to this question may vary, as there are many different types of investments you can make. However, investing is usually a better option for long-term goals such as saving for retirement or an education fund. It gives these investments the opportunity to be held for a longer period of time, therefore potentially generating a higher return rate.
4) Are there risks involved with investing? Yes, investing does come with the risk of losses. However, you can manage risk by doing your research and asking yourself beforehand if you’re able to handle these potential fluctuations. This goes back to question 2, in things you should consider before investing.
5) What types of investments are there? There are many types of investments to assist you in achieving your financial goals. The main ones including retirement plans, stocks, real estate, and cryptocurrency. Some popular investments in Canada include a registered retirement savings plan (RRSP) and registered education savings plan (RESP). A popular investment in the UK is exchange-traded funds (ETFs) and self-managed super funds (SMSF) in Australia.
6) Do I need to open an investing account? Once you’ve done your research and have decided it’s the right time for you to invest, you can then open an investing account. Depending on the types of investments you’d like to make, you can either open one through your bank with the help of an advisor, or online through popular companies like Wealthsimple and Questrade.
7) What else should I know? When it comes to investing, it can be an overload of information. It’s important to sit down and determine what you’d like to achieve for your financial goals. Don’t rush through the process, take your time, speak to as many people as you can, and always ask questions.
I hope this guide has given you some basic insight on investing. For those of you who are already investing, do you have any advice you’d like to share with beginners? I’d love to hear your thoughts. If you enjoyed this post, be sure to also visit my latest ‘6 Ways to Take Control of Your Financial Future’ here. For more posts relating to productivity, visit my tag here.