Starting your journey in investing can be daunting and can bring up a whole host of nerve-racking questions: Is it too risky? Is it the right time to invest?
A Game Plan
Before investing for the first time, it’s important to assess what your end goal is. Ask yourself what you’re looking for by investing, the risks you’re willing to take, and when you’ll need the money. Different goals will warrant different strategies and timeframes. Learning some basic investing terms can also help you make good decisions for your goals.
While many assume that a lot of money is required to begin investing, it just isn’t the case. You can begin investing with as little as $5 and go on to invest with the highest amount you can afford. Just ensure you take into consideration your investment goals and realistic timeframes.
Saving up for retirement is a normal investment goal, and certain accounts are set up specifically to achieve that purpose. Sometimes, the holder pays some sort of penalty if they withdraw the funds too early or for a reason other than their retirement.
Some places you can open an account are with online brokers and robo-advisors.
Some online brokers let you manage your investments and have no required minimum balance, but they do charge fees for stock and options trading. Robo-advisors are automated financial advisors that manage as well as choose your investments for you.
Once you’ve opened your account, you should explore your investment options and the risks each carries. Here are a few common investments you can consider:
Stocks: These are a share of ownership in a company that can be purchased individually for a price or through mutual funds.
Bonds: These are loans that are taken out by a company and usually pay a certain interest rate.
Mutual funds: These are a bundle of investments, including assets like stocks and bonds. Some are professionally managed and can help to remove the burden of picking out individual stocks or bonds. Mutual funds are traded every day after the market closes.
Exchange-traded funds: These are similar to mutual funds and also include a bundle of assets, but are traded on the stock exchange throughout the day.