Investing is one of the staples of the modern economy – more people are educated about investment opportunities than ever before, largely thanks to the Internet. However, those opportunities don’t come without some risk: and those are the two sides of the metaphorical coin that props up the world’s financial system.
Naturally, the reality of risk doesn’t mean you should never invest – it only means you should always make educated decisions. And sure, while publications like the Cayman Financial Review can teach you about precious metals and places like Coinbase can teach you about crypto, some general pieces of financial advice are relevant to all investments.
And that’s exactly what we’re going to cover right here!
Why Am I Investing?
This is the first question you should ask yourself long before you’ve decided to put your money to work by investing it in anything. You need to have a firm grasp on your reasoning and goals; otherwise, you’re bound to make large mistakes because you don’t have your sights set on the big picture.
And yes, making a profit is everyone’s fundamental reason for investing. But don’t just get into it with the unreasonable goal of becoming insanely rich. Few people achieve that, and trying to do it without the proper funds and economic education will probably set you on a sketchy path to speculative investment.
Try finding more tangible, attainable goals for your investments over the course of the next few decades.
Start (And Keep) Reading
The biggest mistake most newbie investors make is rushing into things. Understanding the stock market’s basic functioning isn’t that difficult – you could learn that from a couple of blog posts.
However, if you want to use the stock market to your advantage and invest in stocks, that’s a completely different story. Before you can see what most other investors don’t, you’ll need to do plenty of learning.
Start with some personal finance literature, then slowly move into more complex stuff. And the key here is never to stop reading and learning. Most famous successful investors you’ve heard of constantly reevaluate their choices, decisions, and knowledge. You can always learn something new.
And don’t think that this is only applicable to the stock market. Whether you’re investing in tech startups, real estate, or pricey art – remember it’s all complex once you scratch beneath the surface, and you can never learn everything.
Invest In Stuff You Understand
This may seem obvious – but you’d probably be surprised to learn how many people are quick to throw their money into things they have no personal experience with or knowledge of. Don’t believe us? Just take a look at the booming NFT market!
People hear about crypto or the next investment fad, and they’re quick to jump on the bandwagon simply because there’s a lot of buzz surrounding it. If you’re a beginner, that’s an easy trap to fall into. You should never invest in stuff you don’t understand – especially when it comes to technology.
Protect Your Funds
When you notice other people are greedy, and other inexperienced investors are ready to stay in the game longer or invest more – that’s probably the time to get protective and pull out. If you notice a lot of undue optimism about investing, a certain market, or the economy in general – it’s always a good idea to do some research yourself and see if things are as rosy as they seem.
Of course, that doesn’t mean you necessarily need to stop with your investments if you notice a lot of positive sentiments – it just means you need to know when it’s the time to be aggressive and when it’s time to be protective of your resources.
Don’t Time The Market
As a beginner, you may hear a lot about experts trying to “time the market” and predict what will happen with a certain degree of accuracy. And when you’re still relatively inexperienced, doing that is a really bad idea.
Ultimately, no-one knows what will happen for sure – and you need to keep that in mind when you’re listening to advice, even from the biggest names in finance.
There’s no easy way to see whether you’re at the top or the bottom of a market phase – and trying to predict this for short-term gains will ultimately lead to loss.
Find an investment strategy you’re comfortable with, stick to it, and try to ignore the surrounding noise. Remember, you’re in this for the long haul, not the short-term earnings.
Diversification Is Key
At some point or another, everyone makes a mistake. And that’s why you shouldn’t try to avoid mistakes at all cost – you just need to make sure your mistakes won’t hurt you too badly when they happen. Naturally, the best way to do that is to stick with a diversified investment portfolio.
Invest a bit into bonds, stocks, different commodities, and even real estate. At the end of the day, even when one market falls through, you won’t be stuck with all your eggs in a single rotten basket.
