Step By Step Guide To Start Investing – 5 Tips

Steps To Start Investing

5 Simple Crucial Steps To Start Investing: Whenever someone hears the word investing, the first picture which comes to their mind is a guy in a suit and suitcase. However, the reality is something very different. It could be anyone from your neighbor to a friend to that uncle, anyone.

Also, the misconception that someone needs a financial degree to be an investor should be scrapped. The key here is developing good habits and reading about them. And, if you have done the reading and other preparation work, then here are the steps to help you start spending. Read the guideline and your half work is done.

5 Steps to Start Investing

1. Decide The Amount The First Steps to Start Investing

Considering the amount of investment is the first step one needs to take. The amount depends upon several factors, but the major ones are your final objective and the time remaining to achieve it.

For instance, if one wishes to collect a considerable amount for his retirement, then he can simply start small. Start by investing 10-15% of your total income in the investments. You might think that the amount is low, but the compounding ice ball will make it bigger than your imagination.

If there is any other goal like an international holiday or destination wedding, then set the time horizon accordingly. And then take the necessary steps.

2. Decide the Approach: The Next Steps to Start Investing

There are several approaches through which a person can invest. Some of the conventional investing methods are hiring a money manager, taking the brokerage service, using an automatic AI-based investment approach, and of course, managing all by you. There are many others too, but these are the notable ones.

Remember that every approach has its pros and cons, and it is necessary to read about all of them in detail. One can get the required information on the web. For instance, the investment managers charge a high amount of fees, and thus, it is not feasible for everyone to use this method.

Automatic or Robo investing is when a machine invests automatically based on a fixed algorithm which is decided after asking you specific questions.

In total, one must decide which suits him best.

3. Open an Investment Account: The Next Steps to Start Investing

After deciding the right approach to invest your valuable money, it’s time to open an account.

It can also depend on your approach. For example, if you decided to go for Robo adviser, then it is not common for all brokers to have this service. Moreover, choosing a reliable and genuine AI-based broker is also necessary. Some of the popular options are Ellevest, Betterment, Wealth-simple, and Wealth-front. Remember, the possibilities are limited here.

And, if you decide to go your way, then the options are unlimited. One needs to choose the best broker that is feasible as well as provides the most number of services.

A user can look for factors like minimum deposit amount, withdrawal methods, trading platforms, fees, tools, and the range of investments available.

4. Understand the Options: The Next Steps to Start Investing

When a user invests, he/she must be aware as well as know all the options. There are several choices, including stocks, forex, indices, bonds, commodities, and many more. One can consider any of these market options and go for alternatives like venture investors or real estate too.

There are a number of ways to build up your knowledge base. One can go for books; they are a great option to acquire some information in a short span. Other options include videos, webinars, seminars, courses, E-books, and guides. It is essential to know the difference between every asset.

It would help you diversify your portfolio as more assets will be under your knowledge. And thus the risk mitigates, and the returns maximized.

5. Invest: The Next Steps to Start Investing

Here comes the final step, investment. It isn’t as smooth as it sounds; the proper online stock trading requires strategies, tools, and techniques. Also, it is crucial to do the needed research and analysis of the investment.

The fundamental and technical analysis shall put you in a position to make rational decisions. One would also know if some stock is healthy or not through research. All this shall not be possible without them.

The strategies help the traders to maximize their returns without much effort. Without a proper plan, it would be like walking on the road blindfolded.

The Bottom Line

There is a considerable difference between the investment methodologies earlier and now. Technology has made everything so easy that anyone sitting from home can invest. It is as simple as ordering a pizza.

However, the real dilemma comes when one needs to make a decision. One wrong choice can cost you bucks.

Thus, reading and increasing your skill and knowledge base is of utmost importance. You will get to know the different situations and learn from the experts’ experiences. Here is a good list of the best stock trading books for you!