When choosing an investment instrument, one should not forget about the strategy. Here it is worth relying on the investment goals, the level of knowledge and the availability of free time. There are two main strategic directions – by timing and by risk. There are three options for ROI:
up to a year – short-term;
1-3 years – medium-term;
over three years – long-term.
According to the level of risk, there are two main styles – conservative and aggressive. The first assumes mainly passive income in the long term, the profit is small, the risks are less. The second will require more time, deep knowledge, but will provide an opportunity to get big profits in the shortest possible time. It is associated with high risks.
With the accumulation of experience and capital increase, a change in benchmarks and the choice of new instruments are not excluded. It is recommended to take the first steps in the most reliable options.
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How to start investing for a beginner
Proper preparation will in many ways be the key to a successful start. Learning from experience and expert advice will help you avoid common mistakes. To save time, a brief instruction on how to start investing with a small amount is suitable.
Step 1. The main thing is the goal
Only a clear understanding of what you need to invest for will give you the right direction and help you not to abandon everything after the first failure. The goal should not be abstract; it would be good to write down the desired result with maximum specificity.
Step 2. By concepts
Investing is a specific area rich in different terms. For successful perception of information and non-stop learning, you should familiarize yourself with the basic concepts in advance. It is worth paying attention not only to general definitions, but also to the main indicators and names of working tools.
Step 3. Learning above all else
Regardless of whether investment management is in person or through intermediaries, everyone should have a basic knowledge of economics and how the market works. Understanding the cyclical nature of market processes, the relationship between profit and risk can save you nerve cells.
There are plenty of opportunities to learn basic concepts and laws. These can be books by famous authors about investing. On the Internet, there are enough free trainings and webinars, you can also study the official pages on the social networks of modern investors. Private training or consultations are also available for a certain fee. Naturally, any information received must be considered and weighed before starting work.
Step 4. Correct attitude
No one is immune from mistakes. Even the most famous traders and investors have gotten rich on a number of occasions. For example, Martin Schwartz, who paved the way for the principles of day trading, commented on his success with the following words: “I will tell you how I became a winner. I learned to lose. “
It is worthwhile to draw up an action plan in advance for unforeseen situations. This will help you not get confused and stay in control when you need to make a quick decision.
Step 5. Get started
No investment will work without a minimum start-up capital. Borrowed funds are a bad option for stock games. The following will help in accumulating the required amount:
regular saving of a part of income;
— Additional income;
optimization of your expenses.
It is worth investing when there is free money and there are no burdensome obligations – loans, mortgages.
Step 6. Choosing a style
Before trading starts, you need to set expectations, assess your own capabilities and determine the acceptable risk. If you are afraid to lose, classic instruments in the form of stocks and bonds will come in handy. Let’s risk it? You can try futures and options trading. Only by trial and error can you find your ideal combination when both the process and the result are comfortable. Investing is a great option to increase your income and make your money work. It may seem to many that this is difficult and requires specific skills, but you just have to delve a little deeper into the topic to understand: investments are available to everyone. The article will tell you in detail how to start investing correctly. If you have no time to read, go straight to opening a brokerage account. If you still have a couple of minutes, then let’s continue.
In a small proportion of the population engaged in investing. Only about a percent of the country’s population is present on the stock exchange, while in the United States, even housewives manage their funds. Such a little-known area looks intimidating and is overgrown with myths that do not even match reality. Here are the most common ones.
Myth one: investment is for the rich.
In reality, only a few thousand are enough to enter the stock market. For example, the minimum price of mutual funds is 5-15 thousand, and some brokers do not have a minimum threshold for the opportunity to start trading.
The second myth: it is impossible to earn without in-depth knowledge and skills.