If you are a newbie to the stock market, the entire process might feel a lot intimidating to you. These are a lot different than your savings account, certificates or bonds because the actual price may rise and fall immensely in the stock market. For beginners, this is a roller coaster ride and if they fail to make the right calls keeping aside the emotions, they can partly or wholly lose all of the invested funds.
Why invest now?
Facts never lie and it is a fact that you should start early when it comes to investments. The longer you keep your money invested, the better are the chances for it to grow and yield higher. For those who invest early, they have a better chance of making most of the funds that have been invested. Stock markets do change rapidly but when kept locked in for long period, the instability is covered up with the duration of lock-in. Here are the 3 most important steps to start with! –
Assess your finances
Before you start investing, the first and foremost thing you have got to do is asses your finances to understand whether you are ready or not to entertain the new activity. Make sure that your employment and income sources are secure and sustainable. If you have a significant amount of credit, get rid of it as much as you can before starting your investment journey. Also, create your goals, i.e., whether the money is for your retirement or is it a short term goal of 5-6 years.
Keep some funds aside
This is extremely important for every investor reading this. Before you invest, you should have some money put away from risk regardless of anything else. This cash in hand should be at least equals to 3 months of your total expenses. The aim of this cash is for emergencies and also in case of times when your risk-laden investment takes a massive dip.
Begin with mutual funds or ETFs
For those who are about to begin their investment journey, the safe game plan is to start with mutual funds or ETFs. If you select these, you can stay away from the burden of stock selection. The diversification of stocks, as well as the holdings, will be decided by the respective fund managers and all you need to do is fix a budget for investment.
With these basic tips, your investment journey is all set to be better and devoid of many risks. Hold your patience and your money will grow on its own!