Rather than keeping your money in a stagnant savings account or under your mattress, investing is a wonderful way to make your money work for you. As with all things, there are some risks; however, when done strategically and pragmatically, investing is not as scary as it seems from the outside. There are some key factors that you should keep in mind when you start the process, and we will be discussing three of them here.
The importance of educating yourself and checking your source material
One of the most important things you can do when you start to invest is to collect information from a variety of sources. Start listening to podcasts, researching trends and data, and reading expert testimony. This is a time when having as much information as possible is of great benefit to you. Regardless of the type of portfolio you aspire to, education is non-negotiable.
Luckily, in this internet age, this information exists at our fingertips – with just a quick Google search, you are able to track any cryptocurrency price change to the second, with marketplace apps and websites that monitor the individual blockchains. You can dive deep into the property values of an area, down to the city block.
You are able to track a company’s stock value, each peak and valley, over the course of a day or over five years, with just the click of a button. The moral of this story is that there is no excuse for not doing thorough and factual investigation before getting started. This is the first lesson that investing teaches you: that you are only as good as your research.
Diversify, but also identify your comfort zone
A second lesson that investing teaches you is that a diverse portfolio is a healthy portfolio. While there is merit in investing heavily in a “sure thing”, most experts argue that you should avoid putting all your eggs in one basket. This ensures that if there is a threat to the market, some of your investments will be safe. Additionally, when diversifying, you should identify the limits of your comfort zone. Some people believe in playing it close to their chest – investing small sums of money in industries with promising returns.
Others, the risk takers, chose to embrace the mentality of “go big or go home” and take the plunge of investing large amounts of capital in risky options, which though more volatile, promise more significant returns on investment. Each person needs to determine their personal investment style and the specifics of their strategy. Maybe you are comfortable with investing in the non-traditional world of cryptocurrencies, but according to a strict budget. If a specific cryptocurrency price is not within it, perhaps look into other coins.
Additionally, as is the case with most types of investments, there are levels of commitment. Maybe you decide to invest $500 a month, or potentially $2,000. Regardless of whether you are interested in focusing on cryptocurrency prices, property value or the stock market, there are different expectations. By identifying your comfort zone and diversifying your assets within this zone, you will feel the most comfortable with your decisions. This comfort is crucial, especially in times of volatility, so that you stick with your investments and don’t sell them off.
Establish goals, desires and types of companies you are comfortable supporting
A final lesson that investing teaches you is the importance of creating a code of action for yourself. This code can take many forms. Maybe you are looking to invest consistently, or maybe you want to set returns goals, such as making 10-15% back over the next year.
Or perhaps, you want to set a particular standard for the type of company you invest in – are they focused on green energy or do they donate a certain percentage of their profits to charity? Many companies expound on their mission statements and you should only support companies, cryptocurrencies or building projects that you believe in – this makes your investment so much more meaningful to those impacted by it.
By identifying why you are investing and what you want to achieve, you will be more consistent in your choices and will truly believe in what you are supporting. There are dozens of lessons that you will learn while on your investment journey. However, if you follow these three guidelines, you are sure to start off on the right foot!
Read more interesting articles at blogjunta