A Beginner’s Guide To Investing

Many people dream about starting investing but are soon put off as it can be a daunting world to enter with so much money changing hands and hugely complex terms. This is a shame, as it can actually be incredibly rewarding, lucrative and good fun. You can easily start investing at any moment in your life, and the number of tools and information at your disposal means that it can be relatively straightforward to get started and to soon start making your money work for you. If you are new to the game and want to get to grips with the basics, here is a quick guide for everything you need to know.

Asset Classes

Firstly, there are four main types of investments to consider know as asset classes. These include stocks, which is a share in the ownership of a company so that you get a proportion of the profit (known as the dividend). Asset classes also include cash, referred to as savings put into a bank or building society. This is a secure type of investment as there will be no change in response to external events, although value will be affected by inflation. A third is a property, which involves investing in a physical building with income stream coming from rent with the hope that the capital value of the property will rise. Further, the term also includes bonds, which involved loaning money to a company or a government for a set amount of time at a set interest. Bonds can be bought and sold during the timeframe, and the price may change depending on the credit rating of the issuer.

Minimizing Risk

A no-risk investment does not exist. Otherwise, everyone would be investing in it. There are ways that you can minimize risk, and this is a good idea when starting out. It is safer to invest in a number of shares as opposed to just one, plus it is also wise to diversify your investment portfolio in a range of asset types as opposed to just one. Beginners can also benefit from using a robo-advisor like Wealthsimple, which can automate the investment process and acts as a financial advisor with minimal human input. This is ideal for beginners as it eliminates stress and you can avoid costly mistakes from emotional decisions.

Getting Started

To get started, you will need to find a brokerage firm and open an account. Be warned that there is usually a minimum deposit, which can be as much as $1,000, but it is worth shopping around if you do not want to put down this much on a deposit. Discount brokers will be your best bet, but it does mean that you will not receive investment advice. This can be combated with a robo-advisor. Alternatively, online trading has made it easier than ever to trade, and some discount brokers have no deposit restrictions, although there may be other restrictions and higher fees.

The world of investments is a fascinating one, and it can be a great way to boost your earnings. Hopefully, the above information will give beginners enough confidence to start investing with confidence and see returns in the near future.

Leave a Comment