Whether you’re in your twenties and wondering how best to make your money work for you or in your forties and want to make sure your retirement is secure, it’s never too late to start investing. However, before you jump into the stock market with some “safe” advice from your neighbor, be sure to do your research and understand what you can realistically expect from your first year of investing.
Find support for your financial plans
Consulting a financial planner and creating a financial plan is crucial to investing success. A qualified financial planner will help you determine whether or not you are in a position to invest.
If you’re not yet in a position to invest, a planner can help you create a plan to pay off any debt you may have, and ultimately save money to invest at a later date. Once you’ve saved the money to invest, a financial planner can help you evaluate investment opportunities and create an appropriate investment plan.
learning the ropes
Risk: “No risk, no reward.” All investments carry some risk, but higher risk does not always mean higher reward. While no one wants to lose money, you will never invest money that you cannot afford to lose. You’ll learn right away how an investment can go down (or up) only to reverse in the other direction a few months later.
Finding your niche: In your first year of investing, it’s important to remember that you’re still learning how to invest. While it can be exciting to find emerging investment opportunities, it may be wise to stick with companies that have proven performers. You will soon discover where you are most comfortable putting your money and why.
Importance of diversification: When planning your investments, you will always be asked to diversify. Putting all your money into any one industry or product could spell disaster for your portfolio if that industry were to suffer losses. Diversifying your portfolio will help you strengthen your portfolio against the ups and downs of the market. And while diversifying also includes putting some money into long-term and some short-term investments, you should learn to be cautious and do your research before investing. Investment opportunities that promise big rewards in a short time are often investment fads and are more likely to lose money than make money.
a lifetime of learning
Once you start investing, it’s up to you to continue learning more about the market. Learn about other investment opportunities, evaluate them and find out if they are right for you. Monitor your investments with your financial planner to make sure your investments continue to help you reach the goals you’ve set. While a financial planner is your partner in the process, it is ultimately up to you to make the final decisions.