There are many people out there who believe that investing is too difficult and that they shouldn’t try it. Investing is often seen as the exclusive premise of those with money to burn; it’s considered a rich person’s game, even now, but the truth is that anyone can invest.
With the right attitude, enough research, and a little luck, you can invest successfully, and there’s no reason not to start right now. Here’s our beginner’s guide to investing in 2023, including how to start, where to invest, and what pitfalls to watch out for.
Gather some capital
Before you start investing, it’s a good idea to get a little money together. After all, while it’s true you don’t need to be rich in order to invest, you’re not going to see significant gains unless you start with a reasonable amount of capital.
There’s no “right amount”, but the more you invest, the better your returns will be. If you’re looking to shore up cash quickly, you could consider online loans, which might be a good way to give you some short-term money so you can start seeing those investments pay off.
Don’t be intimidated
At its core, investment is a very simple process. It’s not dissimilar to gambling, although it has a much lower risk rate. You put money into an entity you believe is going to grow over a long period of time, and hope that it does.
This is why you shouldn’t be intimidated or put off by the sizeable industry that’s been built up around investment; many people have a vested interest in making investment look tricky so they can charge you for their help, but the fact is that the barrier to entry is very low.
Research your investments
Before you take the plunge, you need to make sure that you’ve thoroughly researched the company or entity in which you’re planning to invest. For example, let’s say you decide to invest in a company that looks like it’s showing growth right now.
You may not know that this company has a history of making minor gains only to make major losses later down the line, but researching the company’s history will help you to understand the bigger picture, which is crucial for investing.
For example, if you’re contemplating using AvaTrade for online trading, it would be prudent to peruse multiple AvaTrade reviews online. This will provide valuable insight into the effectiveness of their platform and help determine whether it meets your needs or not.
Choose the right investment platform
Nowadays, there are lots of great investment platforms that will help you to get started in the world of investing. Platforms like Vanguard and Nutmeg are good for beginners, as they’ll walk you through the process and help you to build a portfolio that works for you.
It’s not a good idea to try and “go it alone” in the world of investing; while you don’t necessarily need a dedicated financial adviser, using all the tools at your disposal will help you to navigate this occasionally labyrinthine world more effectively.
Consider a pre-built portfolio
Many companies and entities now offer ready-made portfolios, which are stock options selected either by professionals or by professionally-trained AI algorithms to maximise your investment.
If you’re new to the world of investing, then it might be a good idea to opt for one of these portfolios; after all, those who have been investing for a long time may know this world better than you, and may be able to make more informed decisions about what constitutes a savvy investment.
Make sure to diversify
Diversification is one of the most important elements of investment. In essence, diversification means investing in entities across lots of different disciplines or industries, so that if something bad happens to one of those areas, you’ve still got a robust portfolio to fall back on elsewhere.
If your entire portfolio consists of tech investments, for example, but something happens that negatively impacts the tech industry, your portfolio will disproportionately suffer. If you diversify, though, you’ll be able to recover much more quickly.
Define your risk-reward tolerance
As we’ve said, the more you invest, the more money you’re likely to make on the return. That’s why it’s important to know what your risk-reward tolerance is when you set out. As you can imagine, risk tolerance basically refers to how much of a gamble you’re willing to take.
A small, unproven startup could, for instance, be an incredible investment, but it isn’t a safe one because it hasn’t shown consistent performance yet. Whether or not you want to take the plunge is up to you, but unproven investments are often where the big bucks lie.
Expect your money to be untouchable for many years
For the most part, investment money can’t or shouldn’t be withdrawn for a period of at least five years. This term can sometimes differ depending on where your investment is and how much you’ve invested, but you should be prepared not to be able to access your money for at least that long.
If this is going to be a dealbreaker for you, then investment might not be the right option, and you may want to look for other ways to save your money.
Stay in conversation with others
The worst thing you can do as an investor is try to go it alone. Whether it’s your family and friends, fellow investors online (or in person), or trusted professionals, you should make sure that you keep others in the loop when it comes to your investment portfolio.
This way, you can always rely on help and support when you need it, even if that support is only moral or emotional. Investment can be a rocky and tricky process at times, and having others around you will help enormously.
