Tips for New InvestorsRetirement Planning Investment Management
Four Tips For Any New Investor
We know that some may find the world of investing to be intimidating and full of unfamiliar industry jargon, so we've complied four tips that will help anyone starting out with investing.
- Time is on your side-starting early can help in the long run.
- Make your investments personal with a goal-based investing strategy
- Learn the basics-at the end of the day, it's your money.
- Be patient-it's a marathon, not a sprint.
These four tips can help you feel empowered as a new investor, rather than confused. Investing is easier and less expensive than you might think, and we want to help guide you while you learn the ropes. Always remember that investing involves risk. There is always the potential of losing money when you invest in securities.
1.time is on your side- starting early can help in the long run.
Start as soon as possible. This the most important tip what we can give you. Its' time in the market that always pays off in the long run over trying to "time" the market by moving in and out constantly. Time is on the of most powerful tools in growing your investments. If you invest $1,000 today and get a 6% return each year, you can expect your investment to be worth $1,060 at the end of 1 year, and worth over $2,396 in 15 years. It's common to feel like you are barely getting by in your 20's and 30's, but we strongly encourage people to start investing in employer plans and IRAs-even if it's only a very small amount.
2.make your investments personal with a goal-based investing strategy.
Think through what you are actually saving and investing for. Defining the end goal will help you determine how much to save, as well as how risky the investment mix in your portfolio should be. Separating your investments into different buckets based on the desired outcome is called goal-based investing. Defining specific goals can help motivate you to maintain your investments over time, even after the initial excitement wears off.
Examples of goals include retirement, purchasing a home, and saving for your child's education. Once you have determined what you are aiming to do with the money you've saved and invested, you can determine how you want to prioritize your various goals if your cash flow is too tight to save for everything at once.
Corners Financial Planning will work with you to set up your goals and help you match your resources to what matters most by making a Lifetime of Smart Decisions-Make Every Step Count
3.Learn the basics-at the end of the day,it's your money.
There is a whole universe of investment options out there. The good news is that you do not need to choose your own portfolio, or become an expert yourself. However, you should have a basic understanding of the different investment options available.
- Stocks: Securities that represent fractional ownership in a particular company. Stocks are also know as equity investments.
- Bonds: Investments where the investors act as lenders and the company or government is the borrower. Bonds are also know as fixed income instruments, and are typically more stable than stocks.
- Exchange-Traded Funds (ETFs): These are baskets of stock and/or bonds that are packaged together and track an underlying index (section of the economy), such as the S&P 500. Investors can buy shares of an ETF and have exposure to thousands of stocks or bonds within each ETF.
ETFs are a great tool for investors, particularly when just starting out, because they are well-diversified, easily accessible, and can be inexpensive. If you are tight on cash and want to start investing, you may not be able to buy shares of enough different individual stocks to create a well-diversified portfolio.
4.Be patient-it's a marathon, not a sprint.
When you begin investing, it can feel like a slow process. But, be patient, and you will most likely reap the rewards. Slow and steady wins the race. It can be frustrating to start depositing a small amount into your investment account each week, and still see little or no progress when you check your performance a month later. Many new investors think this is a sign of a bad investment strategy and end up selling out of their investments. This is one of the worst things you can do. A long-term investment strategy is constructed to go up in value over several years. Because markets are volatile by nature, in order to see meaningful growth, you are going to have to face volatility, including prolonged periods of lackluster returns or even negative returns.
By keeping your investments intact, you increase your chances of turning losses into gains. In order to instill good investing behavior off the bat, we recommend checking your performance no more than quarterly. We know that this advice can be hard to follow, so consider reading more about how checking on your investments too frequently can hurt your long term progress here.
Accomplish Your Financial Goals
Making the most of your cash through investing can help you accomplish your financial goals. Hopefully these tips will help you feel empowered to get started. Investing your savings is such a powerful way to make your money work for you. It can seem complicated at first, but just like a child learning to save, following these four tips can go a long way to secure your financial future.