Investment Guidelines for Beginner Investors
If you know next to nothing, how do you go about investing? The first thing you need to know about investing is how much do you really know? If not much, then you will need to read a lot to educate yourself.
To be well informed, you need to read the basics. understand what a stock, bond or mutual fund is and the differences between these three financial products and their variables. Read books on finance and investing.
Talk to experienced investors, watch video and live presentations. Once you understand the differences and risks involved in investing in each particular vehicle, then you can move forward with confidence.
Now you can move on to the second phase of investment training. Gain some experience by investing in small stocks and learn from your mistakes as well as your successes. But first, find out what kind of investor you are. Here are some pointers to help you get to the answers.
When investing, have a game plan and set clear goals. The answers to these questions will be valuable guides for you in your endeavor to invest your funds.
o What is your investment schedule?
o What industries are you interested in investing in?
o What is the amount of funds you can safely use to invest to achieve your goals?
o Have you considered your short-term financial needs or goals?
o Do you plan to live off these investments in your retirement years?
Determine your investment style. Are you a risk taker? Or do you like steady earnings? Think about this thought, will you be able to sleep easy at night knowing that your investment is declining and will take a long period of time before it increases? Or would you rather hand your funds over to a fund manager? Do you like minimal risks when investing your funds? Consider what kind of risk you are taking because this will help you choose the financial instruments in which to invest.
What is the time frame you want to invest in stocks? Is it just 15 minutes a day? Or do you think it’s the height of fun to spend 7 to 14 hours a week poring over financial statements and debating the merits of those stocks?
Think carefully about the answers to these questions. If you know what kind of investor you are, you can use your strengths and minimize the risks of the funds you invest with.
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