You finally saved money and decided, okay, I will start my investing journey. Congratulations! You’re on your way to building your wealth. Your next action is to figure out how to start investing for beginners.
Taking your first step into investing can be intimidating. The good news is that various approaches to start investing are tailored to suit your risk tolerance and financial situation.
In this article, we will explore five easy ways you can begin your investment journey and set yourselves on the path to financial success.
Investment Beginner Guide
1. Start investing early.
The earliest possible time to invest is "TODAY." When you invest, your earnings can earn even more over time, thanks to compound earnings. The earlier you begin, the longer your investments grow, enabling you to accumulate substantial wealth.
This means that your investment returns start earning their return, and your account balance can grow faster. Getting a good headstart gives you more time to ride out market ups and downs, increasing the likelihood of achieving solid investment returns.
Starting your investments early also gives you time to develop financial discipline and learn essential investing lessons. You can gain experience, build confidence, and refine your investment strategies over time.
The sooner you start, the sooner you take to double your money. According to the rule of 72, you can double your money in nine years if you get an annualized investment return of 8%. This return is achievable, considering the US market’s historical return is over 10% for the past 50 years.
2. Determine the amount to invest.
The amount you should invest depends on your financial situation and goals. While it may seem overwhelming, it's important to remember that you can start small and gradually increase your investments over time.
A general rule of thumb for retirement is to invest 10% to 15% of your income each year. You can start small and increase your investments over time. For other goals like buying a home or traveling, consider how much you need and break it down into smaller monthly or weekly investments.
It's also crucial to strike a balance between investing a significant enough amount to make progress toward your goals and ensuring that the investment is manageable within your budget.
Consider increasing your investment contributions as your income grows or your financial situation improves. The key is to develop a habit of regular investing and to stay committed to your financial objectives.
3. Open your investment account.
To start investing, you must also open an investment account—research different brokerage firms or investment platforms to find one that suits your needs. Look for low fees, user-friendly interfaces, and access to various investment options.
Some popular options include online brokerage accounts like Moomoo, regulated by the Monetary Authority of Singapore. Choose the account type that aligns with your investment goals and preferences.
You can also check different investing tools to guide and help you start investing.
4. Choose an investment option.
Now, you know how much you want to invest and what investment account you want to open based on your financial situation and goals.
Then you can now choose what to invest in. There are different types of investments with varying levels of risk. It's important to understand those risks and align them with your goals.
Investments for Beginners
As an investor, you have a wide range of options for growing your assets and achieving financial goals. Here are some options you can consider investing in:
Dividend stocks are an option where you buy shares of companies that distribute a portion of their profits to you in the form of dividends.
You can also go to suredividend.com, download the Dividend Aristocrats List, and check 65 stocks that have increased dividends for the past 25 years.
If you want to know more about dividend stocks investing, you can watch Sean's Tik Tok video for an easy and quick tutorial.
Bonds are giving a loan to a company or government organization where they repay you after a specific period, and while waiting for the repayment, you receive interest.
It is a combination of various investments grouped. By investing in a mutual fund, you can avoid individually selecting stocks and bonds, as you can purchase a diverse collection of investments in a single transaction.
Like mutual funds, an exchange-traded fund (ETF) is a collection of various investments. However, you can purchase ETFs at a share price and trade on the stock exchange throughout the day, like individual stocks.
5. Continue Learning
The economy changes constantly, and we should remain lifelong learners to ensure we can adapt. There are various investing beginners books to read, investing podcasts to listen to, and YouTube channels to watch to keep us up-to-date with the market.
Investing as a beginner may seem daunting, but with careful planning, research, and commitment, you can venture on your investment journey and work towards achieving your financial objectives.
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Remember, you can cultivate the right investing mindset and unlock your potential to build wealth through intelligent investing. Together, we can create a network of educated investors who make informed decisions and contribute to their financial well-being!