For most people, investing is a lot more complicated than simply saving. For some a fortune is made, and for some it is lost. But for most of us, getting involved in the investment world requires proper knowledge, proper discipline, and having the right mix of prudence and courage. It doesn’t matter how much advice you receive on stock trading, with every investment comes a hint of uncertainty. But the uncertainty that is created can be reduced significantly if you base your strategy on good habits, and solid financial foundation.
Follow this simple guide so that you don’t have to worry when investing your money.
Step 1 – Create A Separate Fund – Just For Investing
No matter how much preparation is involved, investing is always a bit of a gamble. There is a potential reward, but also a potential risk. Just like in a casino, the gambles you make in the investment world should be thought out well, and measured. But more important that any of that is that you should only invest with money you can afford to lose.
Some go into investing with the conviction that they are going to make money. This is common in beginners, and novices, especially if they go with shorter term investments. They may risk money they didn’t have to risk, and they may lose it.
You should create an investment fund that you fund incrementally, and consistently. A fund that is just used to invest with. A great way to do this is to open a separate brokerage account for each investment fund. Some brokers have no minimum account requirements, so you can start with as little as you can afford to take out from your paycheck.
Step 2 – Always Pay Yourself First
You should consider your investment fund to be another bill, and you should pay it like it was a bill. When you are budgeting your personal finances, you should pay off money that you owe before anything else, and then use what is left for your food, leisure and the rest. It doesn’t matter how big or small your investment fund is, you should consider it to be a bill that must always be paid first.
Step 3 – Start Right Now
It doesn’t matter how small your first investment is, even if it is just a savings account, you should start right now. Many investors state that you always think that you are young enough, and that there is plenty of time to plan. But this isn’t true, the longer you invest in your future the better it will be. This is because you can accumulate more, but also because there is a compound effect with interest.
It doesn’t matter whether you are a pro, or an absolute novice, you should treat your investment like any other bill. You should also ground your investments in good financial habits that allow you to invest without taking risks you with your money that you can’t tolerate.
Remember to create the separate fund, treat it as a bill, and most importantly, start now!