If you’re looking to invest in something, there are 6 things you should know:
1. Investing is not a get-rich-quick scheme.
While it can provide your nest egg with a good return, it’s important to keep in mind that investing is a long-term commitment – and doing so doesn’t mean you’ll have instant success.
2. Understand the risks of investing in stocks.
Stocks are one of the most popular ways to invest because they usually provide higher returns than CDs or savings accounts. However, while stocks can grow value, they also come with risk – especially if you buy them in the wrong company or at the wrong time.
3. Keep your investments balanced.
It’s important for your portfolio to be diversified. That means having a mixture of stocks and bonds – ideally, a portfolio that has 50% in blue chips (large cap), 25% in small caps, and another 25% in international funds that are broad-based and value stocks.
4. Consider the size of your investment.
If you’re just beginning to invest, it’s probably better to start small and build as you go. That way, if you lose money on an investment, the amount won’t be a major setback.
5. Don’t try and time the market.
Instead, focus on dollar-cost-averaging, where you invest the same amount of money regularly – like monthly. This strategy is especially important if you’re investing for retirement and your investments are spread out over a long period of time.
6. Think about your goals first, then pick an investment strategy that suits them.
If you’re looking for steady growth in your portfolio, one way to do this is to invest in equity index funds, which are based on the Standard & Poor’s 500 Index. On the other hand, if your goal is wealth preservation, then fixed-income – such as bonds or GICs – is a better investment strategy.
To get started investing, we recommend using a broker such as Ally Invest to get started. If you’re not quite ready to trade on your own, check out Acorns, which is a simple platform that will automatically invest your spare change for you.
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