Investing for Beginners: Tips to Get You Started
January 30, 2018 |
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Investing can sound like a daunting task, and depending on your approach, it could be a difficult one. But it doesn’t have to be. There are all kinds of ways to invest your money, even if you don’t have much to invest right at the beginning. But the sooner you start investing, and the more you can invest along the way, the more you’ll have to spend when you retire. Here are some helpful tips to get you started on the path to investing.
Risk vs. Reward
With most types of investing, there is an element of risk. Before you start diving into the market, it’s important to decide how much of a risk you’re willing to take with your money. The bigger the risk, the bigger the rewards. The younger you start investing, the more risks you should be willing to take. Because investing is a long-term project, your investments will have more time to bounce back should the market take a dip or the economy move into a recession.
As you get older, you should move more of your funds from riskier investments like stocks to more stable investments like bonds. But you don’t have to take risks if you don’t feel comfortable with them. If you lean towards the safer side of things, there are options like mutual funds and money market accounts that can help you build your capital. These accounts don’t offer as high a yield on interest, but they are much safer.
Stocks, bonds, and funds
Knowing the difference between these different kinds of investments is crucial.
A stock is a share in a company. Whether they are publicly traded or private, if you own stock in a company, you become a shareholder or part-owner of that organization. When that company does well, the stock goes up and becomes worth more, and you gain money; conversely, if the company fails, so does the stock. That’s why these are the riskier part of investing.
Bonds are kind of like loans, but instead of you borrowing money from a company or the government, the company or government borrows money from you. In return for borrowing the money, they give you interest. This type of investment is considered safer since you decide how long you’re willing to loan the money, and you’ll know how much you’ll get in return at the end of it.
Mutual funds include both stocks and bonds. When you invest in a mutual fund, your money is combined with other investors’ money into a group fund that is then invested into a combination of stocks and bonds and the fund manager deems appropriate. In this situation, you own a piece of the portfolio. It’s a great way to diversify your investments without having to pay the fees associated with a private investor.
Find the right partnership
Not everyone is going to become an investing savant overnight, and even people who have been investing for years need help deciding the right options for them. Now is the time to do your research.
Decide how involved and hands-on you want to be in the investment processes, and then try to find a financial institution or investment broker that will meet those needs. Check their reviews as well as their fees to find the one that is right for you. Don’t worry about meeting or talking with different companies until you find the right one. It’s your money—you have to feel confident it’s being handled by the right people.
Invest at every opportunity
Does your company offer a 401(k) matching program? Do you participate fully in it? You should. Whatever your company offers to match your 401(k) program, contribute the max to get the match. It’s free money that you can use when you retire. It might not be as exciting as jumping into the stock market, but it’s a great way to help build your investments for the future.
Dime has a number of ways to help you make the most of your money. Speak with a member of our team today and see which option is right for your goals financial goals. Call us today at 1-800-321-DIME (3463).