Beginners guide on how and why they should invest as soon as possible.
I want you to know something special, it’s called securing your financial future through investing in stocks.
INTRODUCTORY REFLECTIONS ON THE WORD “STOCKS”
Having multiple sources of income is something that is not only a compliment on your financial strength, but is necessary with the fierce competition in today’s world. Remember there is more than one reliable method of creating long-term wealth and it’s the stock market.
Before we talk about what stocks can do for you, we need to realize some stock market facts and what makes them so important in an individual’s financial life. Look to the facts, they tell you a little bit about the history and a little bit about the stock market itself.
BASIC APPROACH AND KNOWLEDGE ABOUT INVESTING
You can always expect to receive annualized returns of about 10%. This means that every $1000 you invest in the stock market that market could triple quadruple and even increase in its size to take on other competing markets altogether.
Let’s push this up a step and if you invest in money repeatedly over a lifetime, relatively small amounts of money in your pocket or bank account could turn into millions given that you follow certain rules and guidelines.
SO HOW MUCH DOES YOUR ACCOUNT NEED IN ORDER TO INVEST?
We have seen a common misconception where you need a ton of money to get started. But the real key lies in the fact that stock trading commissions have dropped in a large amount since time. You can practically buy your first stock with only a few hundred dollars. Before we even look at the prospect of how much is needed to invest in your stocks you must look at brokers, they come in online and physical firm shape as well. Online brokers include companies like QUESTRADE, WEALTHSIMPLE, FIDELITY INVESTMENTS, E-TRADE.
INVESTING WITH X AMOUNT OF MONEY
Do not think budget terms for a second and think of how you allocate money towards your investing goal(s) going forward. Automating investment matters a lot in a market where prices go up and down a lot. For purposes of this article I will leave the part of how much you need to invest in your hand with links below.
Just remember that the sooner you start investing the best it gets. Your money will never have more long-term compounding power than it does right now.
DO YOU THINK YOUR READY TO INVEST?
Keeping in mind things can change you need to start investing right now if you are to have a good future in stock investing. Manage your finances the right way and you’ll be debt-free in no time. Look at certain things like removing debt, establishing an emergency fund, so your investment is not affected by liabilities in your life.
First off pay off all your high interest or low-interest debt. It will allow you to truly experience this thing we call financial freedom as you are not legally obligated to return any liabilities to your assets, in turn, increasing your net worth. Establish how much loan you currently have and then what effect does that have on your credit history.
Go and establish an emergency fund. Nobody wants to be left hanging, so why leave yourself hanging at the end of the financial ruin cliff. This fund allows you to hoard cash and use it in case of emergencies only. Do not expect to make a killing on this investment because this does not yield high interest. You can get on most savings accounts won't even keep up with inflation — but the peace of mind it gets you is priceless.
These are some of the things you must keep in mind when thinking about whether you should start investing in stocks.
UNDERSTANDING YOUR INVESTMENT GOALS
Research investment vehicles you would possibly want to invest in?
1. Index funds
2. Bonds
3. ETF’s
4. Stocks
5. Certificates of deposits (CDs)
Start with understanding your investment goals. Write these down.
1. Why are you investing?
2. What is your risk tolerance?
3. What is your investment priority?
4. How much time do you want to spend on your investments?
DO RESEARCH BEFORE INVESTING
You have to understand why are you even investing?
Investing is a daunting step to take. Have you sat down and wondered what is your investment strategy? What role does risk play in your life? Is your risk tolerance high, low or on par?
What is your risk tolerance like?
Have you ever thought about what your risk tolerance looks like? Well you can’t physically look at it because this is your personality trait. Ask yourself would you be more willing to fight the constant up and down cycle while achieving and amassing great returns for your long-term haul OR just the short term swings and ups and downs of the stock market.
Three things to remember for your stock market involvement;
· Ticker symbols
· Growth Chart
· Long Term Stocks that have proven against time that they can indeed stand the full force of the stock market.
To determine the ability to take a risk, one must become familiar with the concept of risk-reward. This concept means the higher the risk of a particular investment, the higher the possible return. Financial exposure is the amount an investor stands to lose in investment if it fails. Always make sure you seek to optimally limit your financial exposure which helps maximize your profit.
I personally follow this model below to help me constantly seek out the best possible investment I can push out for my long term.
QUESTIONNAIRE FOR RISK TOLERANCE
The reason why you must know your own risk tolerance is that so you do not run into any sorts of surprises whether it be gain or loss. You should always be aware of the struggles and gains that are made from your investments. I would highly recommend keeping up with yahoo finance or any other accredited financial market website that displays your relevant stock market. Here are the questions needed for assessing risk tolerance. Fill it out and see where your investment tolerance lies before you actually head over to your financial institution(s)
CONCLUSION FOR RISK ASSESSMENT QUESTIONNAIRE
CONCLUSION:
I have laid out some foundations for people to understand that this is not definitive I have done this in my own interest to help people gain financial knowledge. I will ensure that you remain updated with the next and upcoming series of articles that I will write on this publishing platform.
Much Love.
