Wondering! How to start investing?
If you’re looking for how to start investing and want to achieve your financial objectives, here are ten steps you can follow to get started:
- First Educate Yourself: Before you start investing, it’s important to understand the basics of investing. You can take courses, read some books and watch youtube videos.
- Set Your Financial Goals & Strategy: Find the reasons why you want to invest your money. Are you investing for retirement, a down payment on a house, or a child’s education? Your investment strategy will depend on your goals and timeline.
- Evaluate Your Risk Tolerance: Risk tolerance can be categorized as conservative, moderate, or aggressive, and select investments accordingly.
- Prepare Yourself Mentally: Mindset is everything when you start investing. Ask yourself, are you going to sell the stocks if they fall?
- Build an Emergency Fund: Before you start investing, it’s a good idea to build an emergency fund to cover unexpected expenses and pay all your debts. This will help you avoid the need to sell your investments.
- Open an investment account: Choose a brokerage firm or investment platform that meets your needs. You can also consider factors such as fees, investment options, and account type. There are different types of accounts, such as tax savings, retirement, Etc. Check which account serves your purpose. Many banks offer free investment accounts. You can explore your option on this.
- Put Your Savings on Auto-Pilot: Create a habit of investing regularly. Determine the amount you can afford to save each month. This will depend on your income, expenses, and financial goals. Set up automatic transfers to your investment account.
- DiversifyPortfolio: Diversification is key to managing risk in your investments. Don’t invest based on trends. Start with a diversified portfolio. You can start with ETFs or mutual funds. Start with less risky options.
- Monitor your investments: Keep track of your investments and adjust as needed. Monitor market conditions and be prepared to change your portfolio if necessary.
- Cut the Noise: The key is to strike a balance between staying informed and cutting out the negative noise. Media will always create hype, fear, or excitement. Your education and mindset will help you stay determined on your path.
When not to invest?
Investing can be a great way to grow your wealth, but there are also times when it’s best to hold off on investing and rethink. Here are some scenarios of when not to invest:
- Do not invest if you are going to need your money in the next one year.
- Do not invest if you can not explain in 1 min why you are buying this investment (other than it will grow in the future).
- Do not invest if you have any loan with more than a 10% interest rate. Pay your loan first.
- Do not invest if you cannot afford the potential loss of your investment.
- Do not invest if you feel pressured by others or fear missing out (FOMO).
- Do not invest if you are in a state of emotional distress or instability.
What should be your first goal?
It’s up to you to decide what are your investment goals.
In the 1990s, Charlie gave this direction in response to a young man who asked:
“What is your best advice on how to create wealth?”
Charlie Munger’s golden words
“The first $100,000 is a b***h, but you gotta do it. I don’t care what you have to do – if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
What’s yours?
If you’re looking for how to start investing and want to achieve your financial objectives, here are ten steps you can follow to get started:
- First Educate Yourself: Before you start investing, it’s important to understand the basics of investing. You can take courses, read some books and watch youtube videos.
- Set Your Financial Goals & Strategy: Find the reasons why you want to invest your money. Are you investing for retirement, a down payment on a house, or a child’s education? Your investment strategy will depend on your goals and timeline.
- Evaluate Your Risk Tolerance: Risk tolerance can be categorized as conservative, moderate, or aggressive, and select investments accordingly.
- Prepare Yourself Mentally: Mindset is everything when you start investing. Ask yourself, are you going to sell the stocks if they fall?
- Build an Emergency Fund: Before you start investing, it’s a good idea to build an emergency fund to cover unexpected expenses and pay all your debts. This will help you avoid the need to sell your investments.
- Open an investment account: Choose a brokerage firm or investment platform that meets your needs. You can also consider factors such as fees, investment options, and account type. There are different types of accounts, such as tax savings, retirement, Etc. Check which account serves your purpose. Many banks offer free investment accounts. You can explore your option on this.
- Put Your Savings on Auto-Pilot: Create a habit of investing regularly. Determine the amount you can afford to save each month. This will depend on your income, expenses, and financial goals. Set up automatic transfers to your investment account.
- DiversifyPortfolio: Diversification is key to managing risk in your investments. Don’t invest based on trends. Start with a diversified portfolio. You can start with ETFs or mutual funds. Start with less risky options.
- Monitor your investments: Keep track of your investments and adjust as needed. Monitor market conditions and be prepared to change your portfolio if necessary.
- Cut the Noise: The key is to strike a balance between staying informed and cutting out the negative noise. Media will always create hype, fear, or excitement. Your education and mindset will help you stay determined on your path.
When not to invest?
Investing can be a great way to grow your wealth, but there are also times when it’s best to hold off on investing and rethink. Here are some scenarios of when not to invest:
- Do not invest if you are going to need your money in the next one year.
- Do not invest if you can not explain in 1 min why you are buying this investment (other than it will grow in the future).
- Do not invest if you have any loan with more than a 10% interest rate. Pay your loan first.
- Do not invest if you cannot afford the potential loss of your investment.
- Do not invest if you feel pressured by others or fear missing out (FOMO).
- Do not invest if you are in a state of emotional distress or instability.
What should be your first goal?
It’s up to you to decide what are your investment goals.
In the 1990s, Charlie gave this direction in response to a young man who asked:
“What is your best advice on how to create wealth?”
Charlie Munger’s golden words
“The first $100,000 is a b***h, but you gotta do it. I don’t care what you have to do – if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
What’s yours?