First Time Investing: 5 Steps You Need To Consider Before Splashing Your Cash

Before you splash your cash and throw your money into an investment, you must learn about it. Firstly, you need to consider your investment goals. It will then help determine what type of investments you should invest in.

The stock market can be quite complex for those who don’t understand business terminology. Furthermore, the business world could be a bunch of numbers to some people. Nevertheless, the stock market is something that you don’t need to learn overnight. People who have been investing in the market for a few years still don’t know everything so don’t put pressure on yourself to do the same. 

Open An Investment Account

The first step is to open an investment which won’t charge additional fees. There are several mobile apps which you can use that charge little fees if any at all. One of those apps is Trading 212 and this is a great app for beginners. Plus, they don’t charge that much in fees. 

Some people open an IRA brokerage account which is designed for retirement savers. If you consider this route for your retirement plan then that isn’t a bad decision to make. However, if you max out this account, you must open another trading account.

Start As Early As Possible

As soon as you have the idea of investing, you should start. However, you must start small as you know very little at this stage. The earlier you start the better as your future self will thank you for it. It is a great way to use that spare cash you have and make even more money. 

The issue that some people have is they don’t know how much money they have to start with. The perk of investing is that you can start with as little as you want. It could be $10, $20 or even $50. That depends on how much you have left of your wage. There is no point in committing to a certain amount each month when you don’t have that money. If anything, it is better to start small and then when your wage increases, increase the amount of money you put into your investment account.

There are many mobile apps which are used to invest in stocks and bonds. Just ensure you pick the apps that don’t take a commission or have service charges, especially if you start with very little money. Mobile apps are a great way to constantly check your stock investments and see the progress. Apps like Trading 212 also have a practice version. Here they will give you £5000 which you can practice trading with. This doesn’t affect the stock market and it isn’t real money. However, it is a great way to practice trading methods which can help with your money. 

Pick The Amount You Want To Invest 

Once you have decided on making the initial investment, the next step is to decide how much you want to invest regularly. Again, you need to be willing to commit to a certain amount that you can afford. Furthermore, this investment will be a regular occurrence so therefore, you need to make sure you can afford it each month. Additionally, you need to understand what your investment goals are. For example, are you saving for a deposit on a home or do you want to save for a new car? 

Some people will dedicate 10% of their income each month to put in their investment account. Other people will put about 25% of their income into a savings account. It all depends on your investment goals and how much you are willing to invest. As long as you commit to a certain amount, you will achieve the investment goals you set. 

Pick Your Investment Strategy

This next step can be time-consuming however it will make a massive difference. Some investors make the mistake of putting all their money into one stock and then watching it fluctuate in value over time. However, that is not the best strategy, especially if you want to see gradual growth. 

You will be surprised to know there are many different investment strategies people use. That is why it is important to learn about them all to see which one suits your investment goals. Each investment strategy will achieve different goals. 

There are many other areas where you can invest your money. If you aim for a long-term goal such as a contribution to your retirement plan, investing in stocks is the better investment. The issue with choosing the stock market is that there are many things to read and learn. If you wish to save time, consider investing in mutual funds or an ETF.

Look At Different Investments 

Now that you have completed those different steps, it is time to look at the different types of investments. Some of those include stocks, bonds, mutual funds and ETFs. 

A stock is when you own a share(s) of a company. These are purchased at a share price which is determined by supply and demand. If you sell several shares, the share price will decrease. However, if you buy multiple shares of a stock, it will increase the share price. 

Bonds are when you offer money to a company or government. It will essentially be a loan to them where they pay you back by a certain date. You will also be able to gain interest on this loan over time. 

Finally, mutual funds. It is a combined investment of both stocks and bonds that helps to diversify your portfolio. These charge much lower fees than stocks and bonds because they don’t return that much money. Nonetheless, these are a much safer investment for those who don’t want to put time and effort into investing and learning about new stocks. 

To Conclude

There are several areas where you can invest your money. However, you must conduct your research before you invest your money. The last thing you will want is to lose your investment a month or two after your investment. If you are willing to invest your money without conducting research, there is no point in investing at all. 

One of the biggest worries with investing is the number of internet scams. Due to this, people are not willing to invest and would much rather put their money into a savings account. However, your money will be safe if you research your investment. Make sure you question the broker if you are going to invest. Research that broker to ensure they are regulated to make sure your money is safe with them.