At some point you might wish to start investing for the first time. It might seem scary, and it might seem out of league – but don’t you worry. We have created this list of seven different tips to get you going, so that it hopefully will be a bit easier for you as a beginner.
1. Set yourself specific goals.
Do you wish to invest in order to retire early, buy a house in 10 years or something completely different? Calculate how much money you will need, and when. The answer will give you a clue as to how much you should invest, and how high a risk you have to take in order to achieve what you want.
2. Understand what risk is and can cause.
Many people think of risk only as a possibility of loss. Risk is just as much an opportunity for gain. In finance, risk is an expression of value fluctuations. You must be honest with yourself about how much value fluctuations you are willing to tolerate in order to increase the chances of a good return.
3. Understand what you are investing in.
You’ve worked hard for your money, don’t ‘throw’ it away! Before you put your money into something, familiarize yourself with what it is. If it is a share in a company that produces hematology analyzers, read about the company. If it is a fund, read about the types of shares or securities the fund invests in. There is a lot of information. You should never invest in something you don’t understand.
4. Understand how important time is.
If you put money in a market that normally increases in value over a longer period of time (6-10 years), such as property, time will most likely be good to you. Then you can eventually get a return on the investment. Some also call it the interest rate effect or the “snowball effect”. Over several years, a lot can become more, and more.
5. Spread your risk.
Nobody knows what will happen in a week or a year, spreading your investments increases the chance of a more stable return. You don’t need to invest in a lot of different things to achieve this, if you buy a fund, you can get it in one product. Funds are like ready-made package solutions. You can choose from many different types of funds.
6. Be prepared for setbacks, use them to your advantage.
Be true to your own goal: If your goal is many years ahead, there is every reason to buy, not sell, when prices fall. When others are selling in panic, you can make bargains. Many fortunes have been created in the wake of major crises, just remember to stick to your budget.
7. Invest regularly
Setting aside money each month increases the chance of success. By buying through both ups and downs, you ensure a good average price for your investments. It is a good insurance against “missing” the timing. Savings agreements in funds are smart for “automating” your investments.