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Where to Begin with Investment Opportunities: A Practical Guide To Getting Started In Investing

Practical Guide To Getting Started In Investing Financial investing is a surefire way to set yourself up for greater financial security in later life.

Despite this, only a small percentage of people actually invest in bonds, funds, and stocks, according to Entrepreneur reports. One of the underlying reasons why many people don’t invest is because it may seem complicated, expensive, or even fruitless, but this couldn’t be further from the truth. Setting aside small amounts of money is an easy habit to get into and its value will only grow over time. Here are some foundational concepts that are important to learn before you get started in investing.

Basic Types of Investing

There are several different types of investments you can get started with as a beginner. Investing in stock means you buy partial ownership of that company. The good news is, that stocks have high return potential; if the company succeeds over time, you’ll benefit very well financially. For beginners, reviews like the Motley Fool Rule Breakers can be a great source of information in this regard. Bonds (or fixed-income investments) involve lending money to the issuer in exchange for an interest payout. They provide a steady income stream and are typically more stable than stocks, but with a lower return. Lastly, mutual funds and ETFs (exchange-traded funds) are essentially pools of money from many investors, which are then invested in an assortment of stocks or bonds (or both) as well as other types of investments.

How Much Should I invest?

Practical Guide To Getting Started In Investing You can start investing with as little or as much money as you can afford. A good rule of thumb is to invest at least 10% of your regular income but aim to have at least six months' worth of emergency savings before you begin. There are even investment apps that allow you to invest

$5 at a time if you really want to start off small. A great advantage of starting small is that even if you have to face losses, they will not be extremely huge. It’s especially advised to people who’d like to go slow, not risk a lot, and are willing to give themselves time to learn the ropes. The most important thing is to just dive in and start investing as much as you can afford and make it a habit.

Active Vs. Passive Investing

Active investing is the preferred method among professionals and people willing to devote a lot of time to trading. It involves closely following companies and investing in individual stocks and bonds depending on their future outlook. In contrast, passive investing is a long-term method that involves investing in stocks regardless of the ups and downs of the market. If you don’t want to spend time on investing, passive investing is the way to go.

Once you've done your research and know which route you want to go, you’re ready to open a brokerage account. Shop around different brokerages and compare and contrast costs and special features. Since you’re a beginner, it’s important you pick a brokerage that offers advice and support. Done carefully over many years, investing has the ability to improve your financial situation significantly.

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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 18th May 2022.

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