When people start earning and become financially stable, they start spending their money on savings. The saving and spending behaviors depend on person to person and what kind of lifestyle they want to follow. While some start overspending with financial independence, some start investing their savings in the investment market.
If you belong to the later part of the group, here is a small secret that will significantly help you with your investment. To be successful in the investment market, the trick is to start as early as possible. You don’t have to think about how big of an investment you need to make; just find the best stocks to buy now and invest in them.
If this is the forest time you are entering the investment market, the following steps will guide you towards making smart and profitable investment decisions.
Start Investing: 5 Simple Steps To Follow
We often talk to our readers about the arts of investing. Most readers think that investing is something reserved for only the rich. No, even if you have small savings, you can become a part of the investment market and gradually increase your portfolio.
Here is an outlined plan enumerated in steps for your first investment.
Step 1: Save Money & Clear Your Debt
Perhaps this might be an obvious step for everyone out there, but you would be surprised to know just to what extent the people have avoided it. In a recent study made by GoBanking, it has been found that almost 70% of Americans have hardly any savings.
If you want to become an investor, you need cash, and for that, you need to start saving. If you have debts, you must clear your debt first before starting to save money. Otherwise, all your earnings will go into paying the interest on your debts.
Step 2: Go For Long-Term Investment Plan
Most new investors get confused about the investment market for the trading market and start trying to time the market – buying low and selling high. If you are in the investment market, you are not an investor but a trader.
If you truly want to be a successful investor, you are looking for at least a minimum of five years as your investment. Investment is all about how much time you put into the assets.
Step 3: Open A Brokerage Account
Now that you get the hang of what investing is all about, we are getting practice with the steps. Opening a brokerage account is the best way to deal with trading. A brokerage account is like a bank account for traders and investors.
Opening a brokerage account is as simple as opening a bank account online. There are many discount brokerages on the internet, while some charge $5 for every trade you make, while some are commission-free, like Robinhood.
Step 4: Buy Low-Cost Index Funds
As you are new to the investment industry, you must stick with simple and low-cost investment ideas. You don’t have to invest in assets and companies that you have no understanding of.
Mutual funds are the first assets where most investors start their journey; however, some of the mutual funds can be risky and need elaborate research before investing.
Step 5: Invest Regularly
Once you have a brokerage account, try to be frequent with your investment. You can invest every month from the savings of your paycheck or simply set up an automatic function with an investment frequency.
Being a beginner in the investment industry, keeping your investment simple and low cost mitigates the risk associated with the investment.
If you think successful investors are different from you, you are correct. They are different in terms of the mindset they carry, and instead of overspending on the thing for luxury, they tend to spend all their savings on assets.
If you truly want to be successful as an investor, you must keep these three points in your mind:
- Remain debt-free.
- Keeps your cost low by investing in low-cost assets like index funds.
- Plan for long-term investment.
If you can uphold these three points and carry on with your investment, your future self in 30 years will thank you for the decision you have taken today.