After successfully conquering your finances, now you’re about to start building your wealth. We all have heard the term ‘making money work for you’ but how does that actually work? Putting in your hard-earned money into the stock market can be daunting when you’re unsure how to go about it, so here’s what you need to know about investments:
What is investing?
In simpler terms, investing is when you invest your money with the ultimate goal of receiving more money in the long run, a higher return than the amount you first invested with. Investing isn’t tied down to just stock markets - you can invest in real estate or even your own business. Wherever you put your money into, you are expecting to earn even more money in the near future.
When should you start investing?
The general rule of thumb is that you should start investing as early as possible, mainly because the sooner you start, the more time you’ll have to grow your investments. However, there are several factors to take into account before you start investing:
Make sure all of your debts are paid off
Since debts are part of your monthly expenses, the least you can do is settle them first so that you can invest worry-free.
Have emergency savings
Imagine relying only on one income and it is merely enough to cover your debts and expenses. That’s a big no-no, you’ll have to prepare some sort of emergency funds so that you can invest without worrying about losing all of your money.
How to start investing?
- Come up with a specific budget
When you start investing for the first time, be sure to set aside a budget on how much you plan to invest every month. Come up with an investment strategy after you’ve finalised your budget. Remember, it doesn’t have to be a large amount, you can simply start with how much you can afford - even if it’s small.
- Find out your investment style
Everyone has a different goal when it comes to investing. Hence, you should identify how much of a risk-taker you are as well as the total time spent to invest and where you intend to invest the money.
- Use the right trading platform
Using the right platform for trading could make or break your investments when you’re just starting out as trading platforms have varying fees or minimums for deposits, withdrawals etc.
- Create an account and start investing
Now after getting the basics done, you can begin creating your investment accounts and start investing with the amount that you’re most comfortable with. Remember that you do not need to start with a large amount of money, rather you should start with an amount that is within your capabilities.
- Regularly check your accounts
Just like everything else that you own, you should keep checking your investment portfolio and monitor it on a frequent basis. That way, you can identify whether you need to sell off your stocks or keep them, and so on.