I could use some tips and tricks from an investment guru. I’m a college senior graduating soon with a degree in forensic psychology, which means I don’t have any relevant education in investing. Plus, I’ve never known anyone who invested money.
All that said, I’ve managed to save quite a bit of money since I began working as a busboy in high school. It’s been sitting in my savings account all this time. Now that I’ll be graduating and considered an adult, I want to try investing some of it to begin building some wealth.
What should a novice investor know before starting? How can I generate the best returns from my money? Any guidance would be very helpful!
The first thing you should know is that becoming a successful investor is no simple feat. That being said, investing isn’t rocket science, either. There’s a balance to strike. Step one is to fully educate yourself. Leave no stone or pebble unturned. It’s impossible to arm yourself with too much knowledge when it comes to investing. Staff writers at the US Securities and Exchange Commission (SEC) maintain a public checklist for aspiring investors, which highlights ten things to consider before making investment decisions. That’s likely the best place to begin your research.
While some of the items on the list might seem irrelevant, you can rest assured that they aren’t. Never underestimate the value of things, such as a personal financial roadmap or figuring out your own risk tolerance. In terms of understanding the basics, fortunately, there’s absolutely no shortage of guides out there intended for novices. For example, Joshua Kennon at The Balance wrote an informative article, which explains investing for beginners in an easily comprehensible tone. He simplifies everything for readers. According to him, “investing is about laying out money today, with the expectation of getting more money back in the future.” It’s hard to get more straightforward than that.
You should also know that your investment strategy has a big impact on how your stocks perform. There’s a whole slew of different strategies available to investors. Writers at the Wall Street Survivor highlighted five fairly common types of investment strategies. You’ll have to think seriously about which ones are most attractive. Weigh the pros and cons carefully, and understand that the strategy you select isn’t a decision that goes without consequence. You have to align your efforts and decisions with the strategy to produce the expected outcomes.
Also, realize that those strategies represent major categories, and that there are others, too. You’ve likely already heard the phrase “day trader,” which is probably the most commonly cited type of investor in the general public. There are alternatives to that, however, if the idea of trading every single day isn’t appealing. Swing trading strategies could be a possibility. The major difference between day traders and swing traders is that the former never hold stocks for longer than a day, whereas the latter often hold them for weeks or months at a time. Swing trading tends to be less disruptive to daily life.
Another factor to consider is how you plan to continuously inform yourself of the latest investor news. You can’t anticipate favorable stock performance without taking the time to remain privy to influential factors. Take cryptocurrency, for example, which is an extremely popular method of investment for people. That popularity, combined with novelty, makes investments in cryptocurrency stocks much riskier than, say, gold. Investors primarily avert financial losses by remaining cognizant of everything and anything that might impact stock performance. Knowledge is power. Internalize that sentiment as soon as you can and live it as often as possible.
“Never depend on a single income. Make investments to create a second source.” – Warren Buffet
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