Are you ready to start investing? Investing is an excellent way of getting your money to work for you, but you need to make informed decisions about how you want to invest, or you could risk losing all your money.
This is my six-step guide for getting started investing:
- Set financial goals.
- Educate yourself.
- Consult a professional.
- Open a brokerage account.
- Make sure you have a diversified portfolio.
- Review and adjust your investments as necessary.
Set Financial Goals
Before you start investing, you must clearly understand what you’re saving for and how much you’ll need to reach your goals. This could be anything from saving for retirement, buying a house, and paying for your child’s education. Knowing your goals will help you determine your risk tolerance and choose investments that align with them.
Another benefit to setting financial goals is that you will be more motivated to set money aside for investing as you’ll have an end goal in sight!
Educate Yourself
Investing can be complex, so educating yourself about different investments and how they work is essential. For example, stocks represent ownership in a company and can provide growth potential. Bonds are a form of debt and tend to be less risky but provide less growth potential. Real estate investments can provide cash flow, appreciation, and tax benefits.
There are so many options available today for investing, so you must understand the differences between each kind of investment and what benefits and drawbacks they offer.
Consult A Professional
A financial advisor or professional can help you create a personalized investment plan that considers your goals, risk tolerance, and current financial situation. They can also help you diversify your portfolio and make adjustments as needed.
However, working with a professional can also mean paying higher fees. There are many online options to consider if you prefer doing it alone, such as Wealthsimple and Questrade.
Open A Brokerage Account
A brokerage account is an account that holds securities like stocks, ETFs, bonds and other assets on behalf of an investor (that’s you!). Once you know your financial goals and what type of investments best suit you, you’re ready to open a brokerage account.
Make Sure You Have A Diversified Portfolio
It’s essential to diversify your portfolio by investing in a mix of different types of assets, such as stocks, bonds, and real estate. This can help spread out the risk and improve your chances of earning a positive return on your investment.
Review And Adjust Your Investments As Necessary
It’s essential to review how your investments are regularly doing and adjust them as necessary. This doesn’t mean you panic at short-term market fluctuations- it just means you make sure that your portfolio is still aligned with your goals and risk tolerance a few times a year.
Having a balanced portfolio in the first place and investing in diversified investments like ETFs will help cut down on the rebalancing you’ll need.
How Did You Get Started Investing?
Let me know in the comments!
