5 Investing Tips for Beginners

What are the investing tips for beginners?

1. Invest when your finances are ready
2. Set investment goals 
3. Study the basic investment terms
4. Know how much risk you are willing to take 
5. Diversify your investments 

Investing refers to buying assets that increase in value over time and offer returns in the form of capital gains or income payments. It is one of the best ways to build long-term wealth and greater financial security. 

But for beginning investors, there are so many questions to answer when it comes to investing: When should you start investing? What should you invest in? What are the best strategies for investing? 

Here’s some good news: learning about several time-tested investing tips for beginners can take out the complication of investing!  

It’s important to remember that investing is not a “get rich quick” type of solution. If you want to minimize your risk-taking while getting the most out of your potential returns, you need to learn the top strategies for building your investment portfolio. 

Do your due diligence and set realistic expectations. Here are 5 investing tips for beginners to help you get started.  

Invest When Your Finances Are Ready

The biggest barrier to investing as a beginner is simply getting started. For younger people, investing as early as possible is indeed wise because compounding works to their advantage. The amount invested will substantially grow over time. 

However, any beginner who invests should always check if their finances are ready first. Investing means making financial choices, which will always carry a certain degree of risk.  

You won’t be able to afford to invest without first securing your finances. As a general rule of thumb, you should first figure out your daily expenses and build an emergency fund. The emergency fund should equate to three to six months of expenses and it can be used for times of unexpected financial distress like an illness, sudden job loss, major repairs, etc. 

Set Investment Goals

What are your investment goals? Lay out your short- and long-term goals. Short-term investment goal examples could be to go on a vacation or pay off insurance, while long-term investment goal examples could be to save for retirement or a new home. 

Setting investing goals can help provide clarity, and motivation, and allow you to create strategies for reaching those goals.

Study The Basic Investment Terms 

Once you have your finances and goals in order, it is time to start learning about the different investment terms so you can make informed decisions. Learn about bonds, the stock market, mutual funds, index funds, volatility, stock brokers, portfolios, diversification, and more. 

Only after understanding these terms can you look into the investment types that make sense for you.  

Know How Much Risk You Are Willing To Take 

​​Determine your risk tolerance because the stock market is very volatile. Aggressive investors have a high-risk tolerance. They have a high chance of losing the amount they invested, but they also have a higher chance of earning. If you identify as an aggressive investor, your main goal is to maximize the growth of capital. You should be willing to take on losses because of your long-term goals. Some of the investments for aggressive investors commonly include small-company stocks. 

Moderate investors are willing to take risks to a certain degree of market volatility. As a moderate investor, you prefer minimizing risks while also increasing returns equally. A common strategy of moderate investors is to have a balanced portfolio composed of a mix of shares and bonds from stable organizations.

Conservative investors generally avoid risks and stocks that are too volatile. If you are a conservative investor, you won’t mind lower and steady returns as long as you don’t lose your principal investment. An example of a low-risk investment is money market mutual funds. 

Diversify Your Investments

As we said, the market is highly volatile. It will always go up and down. To avoid losing too much money when the stocks go down, make sure you diversify your investment portfolio. This way, some of your stocks will rise, even when other investments may fall. As they said, don’t put all your eggs in one basket. 

Key Takeaway

If you’re just starting in investing, it can be daunting. Make sure you understand the best investing tips for beginners to get the most out of your investments. 

When it comes to investing, it’s important to constantly look for resources to keep up with the market trends and the economy. Stay updated by getting in touch with Benito Keh — one of the most prolific entrepreneurs in the Philippines!