Investment guide for Beginners is a way to structure young people new in investing the proper way or what to know before they start investing.
Investing is key to financial success. If you don’t invest to build a nest egg and accomplish financial goals, you’ll have nothing to showcase for a lifetime of labor.
Of course, you don’t want to invest your money just anywhere — you need to be smart about what you invest in so you can grow your wealth and become financially free.
If you are reading this, you probably understand that investing is smart and that a lot of people have made a lot of money doing it. The problem is, you’re scared to lose all of your money, and you don’t want to do the work involved.
if you read this 5-step guide, you’ll have the basics you need to get started. You don’t need to be scared to lose all of your money if you look long term and follow basic investment rules.
Investment Guide For Beginners
1. Have a personal financial plan
Before you get started in any form of any investment, you must have your plans clearly written out.
How much do you really want to invest?
Why do you want to investing?
What do you know about the investment option? Do we have sufficient information to go by?
The time frame of the investment
The returns you are expecting from the investment
The RISKS involved in the investment is very important to know all the risks involved.
2. Invest as early as possible and as much as you can
Compound interest works magic on your money, turning small and steady investments into a big nest egg that buys financial freedom. The sooner you start investing in assets that produce a reasonable rate of return — and the more you invest in those assets — the harder your money will work for you.
If you start investing at 25, you must invest just $380 monthly over 40 years at 7% to become a millionaire by 65. A total investment of $182,400 leaves you with seven figures. But, if you wait a decade until 35, you need to invest $820 monthly — $295,200 — to achieve the same goal. That’s $112,800 more.
3. Don’t invest in anything you don’t understand
Taking calculated risks requires you to actually understand both the potential reward and the likelihood of loss. Every investment beginners must adhere to this point.
That means you need to know how the investment will make you money, whether the asset has a history of providing promised returns, and how losses could happen.
Unfortunately, too many investors jump on bandwagons without knowing why. It’s this phenomenon that led to a joke currency, Dogecoin, briefly becoming worth around $2 billion despite being modeled after a meme and created as a parody. Of course, unsurprisingly, Dogecoin came crashing down in short order.
To avoid big losses when a can’t-miss investment turns out to be a disaster, take the time to research the fundamentals.
4: Diversify Your Investments
Minimizing investment risks means not only understanding how investments work, but also ensuring you don’t put all your eggs in one basket.
While you may have a particular company you love, if you sink your entire nest egg into buying its stock and it turns out the CFO was a thief who was cooking the books, you could lose everything.
Most of us have fallen victim of this, so it must be avoided when it comes to investment. To reduce the investment risk, it is wise to spread your investments in various asset classes (stocks, bonds, agric, etc.) We can be investing in mutual funds, Nigerian Treasury Bills and at the same time be investing in agriculture.
5. Take calculated risks
Rule No. 1 specifically mentions investing — not just saving. While saving means putting aside money you don’t spend, investing means buying assets that have the potential to provide a reasonable rate of return.
If you save a ton of money but keep cash under your mattress, that money loses value over time thanks to inflation. If you want your nest egg to grow, you need to invest.
This doesn’t mean sinking your savings into lottery tickets, even if you have the potential to turn a $1 investment into millions. You need to take calculated risks.
Everyone has a different risk tolerance, but the general rule of thumb is to invest in riskier assets — such as stocks — when you’re young and have time to recover from downturns. As you get older, move some of your invested money to safer investments with a lower potential rate of return, but less chance of losing it all.
Investing doesn’t have to be hard if you start early, understand investment options, and invest in a mix of different assets to minimize risk.
By following these five basic investment rules, you can invest a lot in the right assets and maximize the chances you’ll end up with a nice nest egg that will allow you to thoroughly enjoy your golden years.