When asking how to start investing for beginners you should include your reason for wanting to start investing.
What has made you think that investing is a possibility?
An investment is a gamble: instead of the security of guaranteed returns, you're taking a risk with your money. The hope is that you make a lot more than you put in but there's the possibility you end up with less.
It may be a good idea but is it something that you have researched.
You may have seen something on social media declaring that you can make a lot of money investing in any number of investment ideas but does that investment have any foundation.
So many people have had their life savings stolen from investment scams, you really do need to research any investment promotions offered to you before giving away a single penny.
If it sounds too good to be true, it probably is.
There are so many ways of investing some that may be suitable for you and some that definitely will not be.
You can invest in almost anything.
- Forex Market
- Stocks and Shares
- Government bonds
- UK property market
- Vintage cars
- Fledgeling technology firms
- Art, including, paintings, sculptures
How are you going to finance your investment?
Do you have a lump sum or a pension you wish to invest?
What is your time scale for wanting to receive profits from your investments?
ALWAYS remember the five golden rules of investing:
- The greater the return you want, the more risk you'll usually have to accept.
- Don't put all your eggs in one basket. Try to diversify as much as you can to lower your risk exposure, ie, invest in different companies, industries and regions.
- If you're saving over the short term, it's wise not to take too much of a risk. It's recommended you invest for at least five years. If you can't, it's often best to steer clear of investing and leave your money in a savings account.
- Review your portfolio. A share might be a dud or you might not be willing to take as many risks as you did before. If you don't review your portfolio regularly, you could end up with a share account which loses money.
- Don't panic. Investments can go down as well as up. Don't be tempted to sell or buy shares just because everyone else is.
How old are you, have you finished your education or at college, are you just starting your working career.
Have you started a family and looking to invest to protect your family or to support your children through college or buying their own home.
All these questions will need answering before deciding on committing your money and then there is the question of what sort of investment have you in mind.
I personally follow the writings of Robert Kiyosaki the author of Rich Dad Poor Dad. Unfortunately, I have only come into contact with his work in the last couple of years when planning on my retirement. He writes that schools do not teach about money and finances but how to prepare for getting a job.
Robert advocates keeping 10% of your earnings to invest for your future. 10% may be a lot to some people. I remember my father informing me when I first went out to work, 1/3 for board and keep, 1/3 for me and 1/3 for savings. It worked whilst I was living at home, but as soon as I moved out when I got married, everything went into the household kitty.
What goes around comes around. I am now semi-retired and with my pension pot decided I wanted to invest. So I was where you are now.
Invest in yourself First
As I said earlier, there are so many ways to invest your money but you need to educate yourself first. You need to invest in yourself first by researching what is available and then sign up to learn all there is to know in the field of investment you are interested in. You can earn while you learn but just be careful you do not lose all your money before you have mastered the basics.
How much should I set aside to put in?
Too many people think you need to have a load of cash to be able to invest in the stock market – you don't, and many smaller investors who ‘drip-feed' in small sums on a regular basis can do much better than those who simply dump a big lump sum into the market.
You should never invest more than you can afford to lose. In the event of a stock market crash, you could face losing a huge chunk of your wealth if you have too much of your money invested. Many financial advisers would suggest you invest for at least five years.
If you have little savings and are heavily indebted, gambling on stock markets could be bad for your financial health. However, If you've built up a nest-egg and are fed up with low savings rates, the stock market could be a decent way to try to earn bigger returns.
Many fund managers allow you to invest a regular small monthly sum which will help build up a larger sum over time, as well as being more manageable for your finances).
My own experience
The areas of investment that I have assessed myself are Forex Trading, Options Trading, Stock Trading, Cryptocurrencies and Blockchain and Startup Investments. I am looking into physical gold. I have been into Property investment in the past, buying properties and renovating and selling on but have not looked at doing this again as I would have to buy in trades to complete the work and this cuts into the profits drastically. This is just my personal position at this time.
You can access information about forex trading, options trading, stock trading, gold trading, real estate trading in a previous post of mine at:
Startup crowdfunding is a new phenomenon and until recently it was not allowed for companies to accept investments from regular people.
Only wealthy people were allowed to invest in private companies. Thanks to Republic and recently updated laws, you can now gain access to the new asset class and be an angel investor in startups.
The law requires that before you invest, you first understand the risks and the rules of investing in startups.
If you would like to know more about startup crowdfunding you can find out more here
I am a member and have invested in several new startups myself
If you are interested in any of the information about please leave a comment or question below and I will help in any way I can.