Learning how to invest your money is one of the most important lessons in life. You don't need to be college educated to start investing, in fact, you don't even need to be a high school graduate. You just need to have a basic understanding of business and have the confidence to make a plan -- consider it a business plan for your life. You can do it.
Why Investing Can Be Scary
For many of us, money and investments weren't discussed at home. These subjects may even be taboo within certain households -- quite possibly, in households that don't have much money or investments.
If your parents or loved-ones aren't financially independent, they probably can't give you good financial advice (despite their best intentions). And even if your family is well-off, there's no guarantee that their financial advice makes sense for you. Plenty of parents encouraged their kids to buy a house during the peak of the housing bubble, because in their lifetimes, housing only went up.
Having said all of this, the first investment that you make will probably be the hardest.
What Should I Invest In?
The most common investments are stocks and bonds, which most financial advisers agree should be held in some proportion based upon your personal circumstances. Stocks represent partial ownership of a company and bonds are a form of "I owe you." Mutual funds can own stocks or bonds or both on your behalf.
There are other ways to invest -- for instance, forex trading-- and these types of investments have their place. But you needn't focus on them if you are just starting out -- sticking to stocks and bonds (and the funds that hold them) is just fine. But if you have debt -- whether, it's credit card debt, mortgage debt or student loans -- it may not make sense for you to own bonds, or, to invest at all.
Know the Difference Between Saving and Investing
There are a few steps before you can become a successful investor: you being employed, having essential insurance coverage, having your personal debts under control and having an emergency savings account in case you lose your job.
Your investments and your savings are very different things. What if the stock market crashes and you lose your job? If you do not have a cash savings account -- and your unemployment benefits do not cover your living expenses -- you'll probably have to sell your investments at the worst possible time. Don't fall into this trap.
No comments:
Post a Comment