Getting Started With Investments

To a lot of people reading thing ‘investments’ will be a word that’s connected to banks and financial advisers, and may as well be written in Latin for all it means to you. That’s because for years, we’ve accepted that investing is something that only millionaires or professional traders do. For the average person – especially a mother with young children to feed and a limited amount of disposable income – having enough money to invest in something and watch it grow is a pipe dream.

If we swapped the word ‘investments’ out for ‘savings,’ though, your perception would probably change. Having a savings account is something that we can all relate to. You probably even have one for the children (or one for yourself, so you can provide for your children at a later date). There may not be millions (or even thousands) of dollars in it, but it’s still there, and you still probably contribute to it whenever you can. If you do, then we have some news for you that might surprise you – if you can afford to save, you can probably afford to invest. Not only that, doing so may well get you a greater return than you’re currently seeing on your savings account.

The latter part of that statement wouldn’t be hard to achieve. If you have a regular savings account with your bank, you’ve probably already noticed that there isn’t much in there beyond whatever you’ve paid in yourself. Across most of the world, interest rates on savings accounts are at record lows, and have been for years. You’re putting in the hard work by sacrificing and making savings, but your money isn’t working as hard as you are. Choosing to go for investments rather than conventional savings may be the way to fix that problem.

If you have around $1000 saved up (and that’s a figure we’ve taken from Nasdaq themselves), you can get yourself started in the world of investments. Here are some things to consider if you think you’re ready to take the plunge.

Your Money Will Probably Get Locked Away

If you’re used to having a savings account, you’re probably also accustomed to dipping into it every now and then if you want to make a big purchase, or if you need to cover an expense. A little while later you’ll top the account back up again, and everything is fine. That isn’t an option you’ll have with the majority of investment vehicles. Once your money has entered into a scheme, there’s generally a period during which you can’t withdraw. That might be as short as one year. It might be as long as five years.

This isn’t done to spite you – locking away the money protects the integrity of the fund, and therefore helps it to achieve the best potential growth. When the no-withdrawal period is over, you can look forward to getting your money back – ideally with a healthy sum on top. It does mean you have to be doubly sure you can cope without the money in the meantime, though.

Get Rich Quick Schemes Are A Bad Idea

If you’re trying to choose what to invest in, and you’ve noticed a particular fund appears to have been growing faster than seemingly anything else in the past few months or years, you’ll probably be tempted to invest your money into it. This might not be a great idea. With rapidly-growing funds, one of two things is likely to be true. Option one is you’ve found the next Apple or Google. Option two is that the value of the fund is inflated, and it’s heading for a crash.

When you have more investing experience, you’ll likely be able to separate the two. When you’re new to it, you should avoid anything that’s fast and volatile like the plague. Wealthy investors are happy to take a punt on a skyrocketing fund, because they can afford to take the loss. When they do, they push the price up. If you can’t afford the loss, go for something a little more stable and reliable. If it works out well, you can always be more speculative with your profits next time around.

Values Go Up As Well As Down

The stock market goes up as well as down. Sometimes a fund will decrease in value for months on end, and then shoot up suddenly. That’s just the way it works. Until the time comes for you to withdraw your funds, try not to worry too much about how that fund is performing, and let time pass. Investing is a little like playing a mobile slots game. You’ve effectively gambled your money, and now you’re waiting for a win. In the meantime, every passing day is like a spin on that mobile slots game; it’s another chance to win, and make a profit. All mobile slots on gambling sites and their related casinos have a ‘return to player rate’ over time, which governs the likelihood of the player winning their money back, and so do most investments. Patience is a virtue. Market conditions one month may be wildly different from how they are the following month.

For your own peace of mind, it’s best not to perform daily or weekly checks on the performance of your investment portfolio. Look at it when it’s time to look at it. By that time, it should have had the chance to do what was expected of it when you put your money in.

Diversity Is Protection

If you’re internet savvy, you’re probably aware of the benefits of keeping your data backed up in more than one place. Doing so means that if your laptop dies or you accidentally delete something, you always have a copy of it elsewhere to restore whatever’s been lost. For exactly the same reason, you shouldn’t invest all of your money into the same fund at the same time.

Even with the best will in the world, the performance of some funds will be a disappointment. That disappointment won’t matter to you if you also had funds investment elsewhere, because the profit gained elsewhere will hopefully balance out the loss or poor performance you’ve experienced with any individual fund.

Always Speak To A Professional

Here’s the single most important thing for you to consider: You should never take your first steps into the investment market alone. ‘Wolf of Wall Street’ might have shown you a world of reckless, irresponsible stock traders, but in 2019 stock trading is a heavily regulated sector full of highly qualified professionals. They have a duty of care to you, and they’re obligated to tell you how everything works, and make sure you’re in full possession of the facts before you invest anywhere.

If you’re looking to invest money – whether it’s a thousand dollars or a hundred thousand – make sure you’ve spoken to a professional for personal, tailored advice before you swap out your savings for shares.

To read more on topics like this, check out the business category.