Most people are at least somewhat aware that investing is one of the best ways of making money and securing our future. However, there are surprisingly few of us who have really started investing and even fewer who succeeded, while the number of failures is all-time high. But investing is still some kind of magic nor something controlled by chance.
The point is that you simply can not lose if you invest right.
Common sense: the basics
Rule number one: simply remember your common sense. Start your investing career with a quick check of your current financial situation. Before you buy anything, pay off all your high-rate debts – paying off a 15% interest loan is exactly like having a 15% return, so do not put off this vital step.
Next, decide what you really want to achieve – a quick rise to give you some extra funds or a long-term investment in your future for retirement. The first strategy is extremely risky, but if you go for the second option, your success is almost assured if you follow some basic rules.
In short, before you do anything, make sure you know your financial situation and you are certain why you are investing. And do not do anything in a rush! Most successful investors are phlegmatic older men, not energetic yuppies. Start with the basics and only go further only when you're sure you've mastered your current level.
How to get money for that
The common myth about investing is that you have to have a lot of money in order to really start making money. The truth is that $ 50 a month is enough to become a player … and get a substantial return over the next few years. If you start to invest $ 50 a month when you are young (let's say, 25 years old), you can earn a third of a million by the time you retire (assuming a moderate 10% return). As you see, you do not have to be a millionaire to start – a few dollars will be enough, especially as your account grows over time.
Where to start
Surprisingly enough, most people decide to start with the stock market. They do not know anything about stock investing and they often lose a few thousand dollars very quickly. This ends their adventure with investing and for the rest of their lives they go on talking about how investments are dangerous, unpredictable or manipulated by greedy brokers, corporations, multimillionaires or aliens.
The point is that stocks are the worst place to start. Before you even start thinking about stocks, consider other options. You may want to even concentrate on other types of investments entirely, at least at first, to gain some experience in investing before you start sailing on the open seas of stock trading.
The safer alternatives for the beginner investor are:
401 (k) plans – a saving plan allowing you to automatically invest some part of your salary in a portfolio of mutual funds and stocks. The choice is limited by your employer, you can only save so much using this method and you generally can not take this money out until you retire. However it is still something worth considering – it is safer and a good start in investing.
Mutual funds – they're an excellent choice for people looking for more flexibility, but with fewer dollars to invest. They combine the investors' money to make deals and purchases impossible for a not-too-wealthy beginner. The fact that your money is divided between various investments add increased safety to your investment, while securing a steady return.