How to Start Your Investment Journey

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Whether you’re a business owner, an employee or someone looking to boost their retirement fund, the idea of becoming an investor can be highly alluring. Though you do need a certain amount of working capital to get started, you can quickly build up quite a portfolio and increase your profits as you go along. For that reason, there are many people who are now choosing investments as a good way of creating additional income. However, this isn’t easy, and 90% of investors fail within the first year. With that in mind, below are some tips to help you start your investment journey in the best way.

Getting Your Finances in Order

Before you can even begin to embark on your journey, you need to think about your finances.  If you don’t, you could end up getting in serious financial difficulties later on down the line. To begin with, you need to look for any outstanding debts you already have, and if possible, clear those up before you start any investments. Secondly, you need to think about where the money for your investments will come from. Ideally, the money you use has to be surplus to your regular budget needs. Some people are tempted to use their retirement fund for their investments. However, this can be a dangerous thing to do, especially if your investments go wrong as you have then lost your retirement fund. A far better way to handle it is to use money that you have left over after you’ve budgeted everything else. That way, if you do end up losing money on your investments, you haven’t put yourself into financial difficulty.

Learn the Basics of Investing

Although you don’t need to be a financial expert in order to invest your money, it is wise that you do at least some basic research before you start. For example, you need to learn the difference between stocks, bonds, mutual funds, and other terminology. There are many books out there on how to become a successful investor as well as much online material. It is also a good idea to keep an eye on the market for a short while before you begin investing so that you know how they move and what companies are doing well and which ones are doing badly. If you intend to go into the housing market, it is a good idea to try and speak to others who have been successful in that area; they can give you tips and advice on the best way to proceed.

Funding

If you don’t have the additional funding to invest, then you need to try and obtain some capital from elsewhere. There are a few options open to you when it comes to funding, so it depends on which one is more suitable for you and your circumstances. One way to raise capital is to approach a bank and ask them for a loan. However, as a new investor, this can sometimes be difficult as you have no experience to show to the bank. Another way to raise funds is to approach a company dedicated to property loans, which you can read more about online. If these options are not open to you, then you can always look to ask friends or family if they can loan you the money initially to invest. This option can often work out better because, in general, friends or family will not charge you interest on the loan.

What’s Your Risk Tolerance?

To many people, investing money, especially large sums of money, can be a scary business.  Add to that the possibility that you could lose some or all of the money that you have invested and you have the potential for a very worrying situation. For that reason, it is crucial that you sit down and think about what your risk tolerance would be. For example, if you lost a small amount of money on an investment, would that be enough to make you panic? How much of your investment would you be prepared to lose before you decide to pull out of the deal? These are questions you need to ask yourself before you begin your investing. Otherwise, you could put large sums of money into an investment that would later cause you great concern.

What Are the Best Areas to Focus Your Investments?

  1. Property

One of the most popular and fastest growing investment areas are property. The main reason for this is many people have been through the process of buying a house before, so it’s not as scary as trying to learn about stocks and shares. Another reason is that property, in general, is a reasonably stable commodity. Although prices do go up and down, they tend to remain stable and therefore a fairly safe investment. Some business owners are also taking advantage property investment by buying office blocks or rows of stores and then renting them out privately. With property, there are were usually two ways you can deal with them; you can buy, renovate and then sell on for profit or you can buy to let.

  1. Stocks and Shares

The other area of significant investment is stocks and shares, though many find this area of investment can be intimidating. Depending on how much you have to invest and your level of risk you’re willing to accept, you can usually find an investment that will suit you. The larger companies tend to be a safe investment though you will get less return for your money. Smaller companies will yield a higher return but are a much riskier prospect. It is one area of investment where you do need to have some level of experience and knowledge before you begin. You can use companies to help you choose your stocks and shares until you become more familiar with the process.

Once you have done a little research and arranged your funding, you can start your investment journey. With some good decisions and a little bit of luck, you can turn your initial investment into a long-term financial benefit.

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