5 Smart Decisions for New Investors

New investors can find money management a daunting task.

 

Selecting a savings account can be fairly straightforward, but choosing what to invest in is a completely different ball game. It’s scary, as many people know that there’s an element of risk involved, and that there are so many companies and a plethora of funds to choose from.

 

Of course there are risks with anything, but investing consistently is a great way to build wealth in the long term, without swapping too much of your time – so it’s more than worth it, if you’re determined to get the hang of it.

 

Breaking investing down into steps can make it far easier and less daunting for you to work towards. Take a look and find 5 helpful steps below:

 

#1- Figure Out Your Goals

 

The first thing you really need to do is figure out your goals.

 

This will help you to assess the time over which your investments can be left to grow. For example, someone saving for a home may simply use a checking account, while an investor setting money aside for retirement would use a 401(k) retirement account.

 

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Sit down and figure out what you’re hoping to achieve, so you know exactly which route to take later on.

 

2. Know Where To Start

 

To start investing in the stock market, you’ll need an account through a mutual fund company, or a retirement plan at work.

 

Online investment services like Moneybox and Nutmeg are great for getting started and ease of use. However, a mutual fund shop is usually the best option, if you want to put money into a variety of funds easily.

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3. Decide What To Invest In

 

You need to know what you’re looking to invest in, if you’re going to be a successful investor.

 

Most people start out with stocks or funds, where you invest directly in companies by buying their shares. You can invest indirectly in a number of businesses via a fund.

 

Investing in a wide range of companies ensures proper diversification, so that your portfolio is safer, but you’ll need to do plenty of research. That isn’t all, though; real estate is another option, and some people choose to invest in bitcoin, or another form of cryptocurrency.

 

4. Be Aware Of Common Mistakes

 

Messing with your portfolio too often is a huge mistake – this is a long term project. You need to pick a strategy and stick to it, even if you encounter issues along the way. Just set it and forget it and you’ll have a much better time.

 

5. Know How Much You Can Afford To Invest

 

You need to know how much you can afford to invest initially, and then monthly/annually. This way, you can explore which investments are right for you. Bear in mind that emergency funds will need to be accessed quickly, and your emergency fund should not be invested in stock and bonds.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

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