Investing For Beginners: A Guide To Fulfill Your Investment Goals
Stocks, which are also called equities, are securities that give shareholders an ownership interest in a public company. It’s a real stake in the business, and if you own all the shares of the business, you control how the business operates. The stock market refers to the collection of stocks that can be bought and sold by the general public on a variety of different exchanges.
Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. In simpler words, investing could be defined as the process of laying out money now with the expectation of receiving more money in the future. But how should you organize your savings?
Consider using the following methods:
Don’t let the media scare you
As a beginner, you should understand that the media and you, as an investor, have very different agendas. The media’s goal is to get views, which they often do by writing sensational headlines. Your goal as an investor is to grow your money over time, and this is achieved by focusing on factors you can control, such as time horizon, risk, costs, and taxes. Research has shown that the less one tinkers with their portfolio, the better off they will be long-term as they don’t try and time the market.
Create a diversified portfolio
Diversification is important because it reduces the risk of any stock in the portfolio hurting overall performance very much, and that actually improves your overall returns. In contrast, if you’re buying only one individual stock, you really do have all your eggs in one basket. The easiest way to create a broad portfolio is by buying an ETF or a mutual fund. The products have diversification built into them, and you don’t have to do any analysis of the companies held in the index fund.
Automate your investments
Splitting your money into four buckets may seem complicated, but it really couldn’t be easier. In fact, you can even automate it! Setting up automatic transfers makes moving money from your chequing account directly into your investment accounts easier. You won’t have to remind yourself to move money over this way. Some investing platforms, like SmartFolio, make automating your investments easy by allowing you to pull directly from your bank account. You choose the frequency and amount that works best for you; SmartFolio does the rest.
Set investment goals
Before stepping into the investment world, you should know your investment goals. Layout your short-medium, and long-term goals and give each goal a specific time frame. For instance, a short-term goal could be a vacation to Greece next year, while a medium-term goal might be a down payment on a house in three to five years. Having tangible goals is a good motivation to keep saving and investing. It also helps you understand how to invest for the time frame attached to each goal.
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