How to Start Investing

Investing is a really broad topic to cover in one article but this one should at least point you in the right direction if you are a new to the investment world. Even before reading all the books on everything from art collectibles to option spreads and derivatives, you should answer one major question for yourself.

What are my investment goals?

Because when people talk about their desire to start investing, they might be talking about absolutely different goals and expectations. Do you want to get rich fast or you just aim for the comfortable retirement 40 years from now? Do you wish to invest sizable inheritance or you have only few bucks to spare each month? Investment opportunities are abundant but so are people’s targets. And there is a huge difference between passive investing into mutual funds and day trading with own online brokerage account. Understand, that the latter isn’t as much investing as it is a very demanding daily job.

Are stocks a good option for me?

Investing into stocks is riskier than into many other assets since stocks are usually much more volatile. Because of that there are two additional questions you must answer for yourself. Will you have the nerves to remain calm if the market goes through the bad times? And are you investing for long enough period of time (7-10 years at minimum) so you will not need to cash the invested funds in the middle of the downturn (in case it comes)?

Investment funds vs Making own purchases

Deciding what company’s shares to buy is usually a lot of fun, especially for novices. Who would not want to own a piece of their favorite retailer or shoe company? But it is very time consuming if you intend to make an informed decisions. It is also much more demanding on personal discipline. There is some compelling evidence that even the best investment funds rarely beat main market indexes in the long run but the opportunity to simply deduct a small portion of your paycheck each month and build gradually your nest egg without much time lost and drama involved in stock picking should make you seriously consider also this option.

Disclaimer: Author isn’t certified investment adviser and the material on this website are provided for information purpose only. Investment of any kind includes significant risks. Author of this website is not responsible for readers’ investment decisions.