Investments are a significant part of your financial future, though they can be intimidating if you’re new to the experience. Knowing where or how much to invest takes time and patience to maximize your long-term monetary potential, these tips for first-time investors will surely help.
As a first-time investor, you likely have questions surrounding the process and best practices. That’s why we’ve laid out five essential tips to consider as a novice investor so you can feel financially confident in the years to come.
1. Have Clear Goals in Place
Before you begin moving your money around or seeking an advisor, you want to ensure you have a clear goal or goals in mind for your long-term finances. Investments are designed to compound your money over time, and if you know exactly where you want that money to go in the future, you’ll have a clearer understanding of the steps you need to take to achieve those goals.
2. Secure a Diverse Portfolio
When it comes to investing, diversity is a word that should always be at the forefront of your thoughts. Diversifying your portfolio involves ensuring you have a mix of investments — some may be low-risk like mutual funds while others may be high-risk, such as playing the stock market. As a first-time investor, you’ll likely start with low-to-medium risk investment options. However, if you plan on keeping these funds tied up for several years, you could potentially stand to invest a portion of your savings in a high-risk portfolio.
The benefit of a diverse portfolio is that your money is in a safer long-term position, rather than betting everything on one sector that may drop significantly — which would leave you at square one.
3. Seek Professional Guidance
Asking for help is important when it comes to any financial matter that you’re unable to handle independently. Just as borrowers seek out temporary payday loans from GoDay when their budget needs some professional help, the same mindset is essential for investing.
If investments feel overwhelming, it’s best to seek a licensed advisor who can help you define your goals and set up your accounts. They’ll also communicate with you along the way as your investments change and allow you to pull out your money if necessary.
4. Automatic Payments
Managing a monthly budget is taxing enough, which is why setting up automated payments is the simplest way to ensure your money is going exactly where it needs to. You decide how much you’re able to allocate each month, and the rest is handled for you — which means you’re able to focus on other aspects of your budget or create a new savings plan.
5. Don’t Worry or Panic
Stocks fluctuate almost daily, as do other high-risk investments. If you’re watching your assets closely, you may notice your money rise and fall several times throughout the month or over a year, which can feel alarming.
When it comes to investing, it’s essential to keep yourself in check and refrain from panicking when you notice a percentage drop. If your money is invested long-term, keep that in mind as the market will rise just as quickly as it fell. As you get closer to the date of your withdrawal, you can speak with your advisor and determine the best time to remove your money, to ensure you’ve secured the most significant possible return on your investment.