Have you ever heard of the term “investment”? If you’re thinking, “that’s a silly question,” well, believe us, we’re in sync with your thoughts.
Most of us know what investments are about, but what’s interesting to note is that a majority of us don’t do much about them, even when we know they can help significantly grow our wealth.
Investing is nothing but putting money into something that you believe will increase in value over time, and in turn, will add value to your future financial worth. But it’s seldom as straightforward as that; there are a few key things you need to keep in mind to make sizable profits.
So what are these things, and more importantly, as a beginner, how can you take the appropriate steps towards financial success in the field? Let’s find out.
Read – Where can you invest in 2021?
Before starting, take a good look at your finances
A bright and stable financial portfolio starts with an adequate plan. As per Douglas Boneparth, president of Bone Fide Wealth, every beginner investor should consider these things before starting:
- Discover your financial goals – First and foremost, identify your goal behind making investments. Most people want an extraordinary post-retirement life, but some believe in focusing on simpler short-term targets. Once you’ve found your goal, ask yourself when you want to achieve it and how much it will cost? Finally, prioritize your targets as per your needs and urgency and start saving accordingly.
- Know your cash flow – Knowing your monthly expenses is very important because it will help ascertain how consistent you can be while investing.
- Always have backup plans – A contingency fund is a must for everyone since it’s the only support in case of emergencies. We all know problems come uninvited, so it’s better to stay prepared, right?
Make full use of your retirement accounts
Retirement accounts are a blessing in disguise as they provide tax benefits along with easy contribution options. Shon Anderson, the chief wealth strategist at Anderson Financial Strategies, advises employees associated with 401(k) plans to maintain an ideal pay that meets their employer’s 401(k) match.
He suggests employees check whether their 401(k) scheme offers target-date funds, that can help choose the amount based on the year a person plans to retire. Also, if you have an option, invest in traditional and Roth IRAs too so that you’ve more resources in hand.
Don’t be overconfident
There are numerous investment options beyond retirement accounts, but if you’re not familiar with them, experts say don’t invest impulsively. Consider taking help from Robo-advisors like Betterment and Wealthfront or opt for Ellevest’s membership service.
If you feel that these platforms are unsatisfactory, then reach out to a professional. Several professionals charge on an hourly or monthly basis, so you can easily hire them without spending a fortune.
Read – Take a look at some good Robo-advisors and their cost
Wrapping it up
People say that investing is not for the weak-hearted, but the fact is that a little self-confidence and market knowledge can make you a pro at it. Remember, there’s no perfect time to invest, so start early to get a strong foothold as soon as you can.