5 Things To Do Before Investing Your Money
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Investing is a way to make your money work for you.
It sounds easy - you invest money, it grows, you don’t spend it, and then one day, you have access to more cash.
Sounds great, so why aren’t more of us doing it?
Firstly, us investing seems hard and confusing for most of us. If you’ve never done it before, investing money can be complicated, you might not know where to start, or even have any idea about different investment options.
Secondly, we’re scared. Money is scary for most of us and we're scared to make mistakes and lose money. We’ve all heard horror stories, or seen them in the movies, whereby the rich invest vast amounts of money in a dead cert, only to lose it all in a wild plot twist.
The truth is investing can be simple, and while there’s always an element of risk, it can be minimized and managed. If the idea of investing your money tempts you, here are five of the things that you should do first.
1. Learn More About Your Investment Options
If you think that the only way to invest is by buying shares in companies, or opening a savings account, you’re wrong.
There are many different kinds of investments, and you should learn more about index funds (ETFs - Exchange Traded Funds) and other options before you get started.
You could also invest in property, antiques, local businesses, gold, mutual funds (unit trusts), and bonds. Learn more about your options and find the right investment for your situation.
2. Know What You Can Afford to Lose
A big part of being careful when investing is knowing how much you can afford to lose!!!
Of course, this also depends on the type of investment that you make. If you’ve got a large sum of money, which you can live without right now, but ideally need for your future retirement fund, investing in property is a great idea. Your investment is tied up, but you could make income from rent, and sell the house, hopefully for a profit in the future.
Investing in stocks and shares can be much riskier, certainly in the short-term. So, if this is your plan, it’s crucial that you never invest anymore than you can afford to lose.
3. Understand the Long Game
However you choose to invest your money, you need to appreciate that you’re playing a long game and not in this to make a quick buck. Cash may be tied up, there may be dips and peaks, and it’s all normal. You won’t make a massive profit on the stock market tomorrow. There may be losses along the way. But, that doesn’t mean that you won’t come out on top.
4. Learn More About Your Finances
Before investing, take a good look at your finances. Try to understand your income and expenditure so that you can invest responsibly. You may be able to live without some of your cash now, but will the same be true in a year?
5. Get Good Advice
Good advice is worth its weight in gold when it comes to investing your money. Speak to people that you know with more experience in the area and get professional advice if you are unsure.
Did this resonate with you?
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