A beginner’s guide to investing

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Investing can sometimes seem like a daunting task. The truth is that there are many different ways to invest your money, and you don’t need a lot of knowledge or experience to start.

 

This article will discuss 36 investing tips for beginners looking to start their investment portfolio. Even if you only have $100.

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1. Keep Your Portfolio Simple

One of the biggest mistakes that new investors make is getting too creative with their portfolios. Instead, it’s best to keep your investments simple to maintain a good amount of control over them.

 

Keeping things under 30 individual positions is ideal so you can avoid being spread out too thin across many companies or funds. For many, index funds may be the way to go for simplicity’s sake.

 

Recommended reading: How to Invest $100: 40 New Ways You Don’t Want to Miss

2. Don’t Invest Too Much Money at Once

Unless you are an experienced investor already, it’s probably not a great idea to start investing significant chunks of money all at once. It takes some time for most people to understand how specific changes in the market will affect what kind of returns they want. There may be more room for error by making any sudden moves initially.

 

Break up your investments over the course of a few months and years to minimize any risks.

3. Rebalance Your Portfolio Regularly

Rebalance your portfolio once or twice per year.  Rebalancing will help ensure that you are not over-focused in any area.

 

Keep reading: Pros and Cons of Investing in Stocks

4. Look Out for Investing Fees

When selecting an investment, always be sure to look out for the fees associated with it. These can range from management fees to account maintenance fees and more. By knowing what these costs will be in advance, you can avoid any surprises down the line.

5. Remember That Investing Should Be Boring

When you’re constantly checking your stocks or investments and making changes based on market fluctuations, you are more likely to make irrational decisions. Don’t sweat short-term losses. Everyone loses money if you look at the short term. Keep your eyes set on the long-term.

6. Start With Index Funds and ETFs

When starting, it’s best to keep things simple by investing in index funds and ETFs. Index funds allow you to follow specific sectors of the market as a whole. When you start investing, shy away from selecting individual stocks.

7. Start at a Young Age

One of the most significant advantages that young investors have over older ones is their ability to start saving early on with compound interest working in their favor.

 

Start today.

8. Reinvest Dividends and Capital Gains

If you have been investing in a company for several years and offer dividends, don’t take the cash right away. Reinvest that money back into your portfolio so it can grow even further.

 

Whenever you sell shares of any stock, always remember to use the proceeds from those sales to buy more companies or investments.

9. Do Not Panic Sell

Whenever the market starts to drop, you may feel tempted to sell off any investments quickly in hopes of minimizing your losses. However, this is rarely a good idea. Those emotions will fade. Wait for things like this to pass and continue monitoring your portfolio over time before making any changes as needed.

10. Keep an Eye Out for Frauds (Especially Mutual Funds)

Be sure that invest only with reputable companies who are transparent about their business practices and how they turn a profit. Mutual fund managers have a lot of experience. Simply knowing does not mean you are any good at your job. Staying away from mutual funds and instead choosing exchange-traded funds and index funds is the way many choose.

11. Do Your Research

Research continually. The difference between an amateur and a pro is one has researched all investment decisions. By reading articles, watching videos, or attending webinars related to investing, you’ll stay up-to-date with the latest trends and changes. You will make more informed decisions when it comes time to begin investing.

12. Have a Long-Term Mindset

You won’t get rich overnight by following any of these tips. The goal should be to think long-term and focus on compound interest, which will work its magic over time.

 

Be patient.

13. Be Realistic With Your Goals and Risk Levels

Set realistic goals rather than having lofty expectations which may not pan out as planned. Also, make sure that you know your risk appetite and what level of market volatility you can handle before you lose money.

14. Diversify When Possible – Don’t Put All Of Your Eggs in One Basket

One great way to reduce the risks is by diversifying into different investments. Diversification will help minimize potential losses if one particular asset or stock price falters over time.

 

Recommended: Pros and Cons of Investing in Stocks

15. Have Fun with Your Financial Goals

Have some fun when you start investing. There are thousands of companies on the stock market. Choose companies you believe in and have good fundamentals. Best to have an investing strategy that you are curious about, not strictly financial.

16. Use Free Resources Whenever Possible

Most investing tips are accessible and free online. Take advantage of any opportunity possible to learn before you open any investment accounts. You will understand more about the stock market and the investment strategy you want to employ.

17. Automate Your Savings

One of the best ways to ensure that you can invest money over time is by automating your savings and all investing activities.

18. Have Multiple Accounts

It’s also helpful to have multiple accounts for saving and investing for various purposes. One account could be explicitly earmarked for emergency funds, while you can designate another for long-term investing over the next decade or so.

19. Treat Investing Like a Business

There should always be an investment plan with multiple strategies and goals along the way, not just one singular focus point.

20. Get Professional Help Where Needed

At certain points throughout their lives, some people may find it helpful to get professional help for their investments. An investment advisor, CPA, and insurance agent will help you throughout your financial journey at different times.

21. Do Not Let Your Emotions Cloud Your Judgment

Don’t allow fear, greed, or panic to take over and cloud judgment when deciding where to invest. Stick to your financial goals and do not make financial decisions when hot-headed.

22. Learn How to Read a Prospectus

A prospectus is a document usually released by a company when they want to offer their shares for sale to the public. The company will disclose all the essential details about the business and its financials. If you are considering a pre-IPO company, read the prospectus.

23. Do Not Try to Time the Market

You will fail. Don’t do it.

24. Have Realistic Expectations

You will not double your money in a month. You will double your cash throughout time and as compound interest adds. Be realistic. Investing is like magic over time.

25. Don’t Forget to Make Regular Contributions

Continue adding to your investments regularly. Most people add monthly. Find out what works best for you.

26. Become Greedy When Others Become Fearful

Warren Buffet is one of the most successful investors in history. This quote sums up his philosophy: Be fearful when others are greedy and greedy only when others are fearful.

 

Buy up the fear when others are selling out of emotion (and sell when they’re buying). Take advantage of this emotional outburst by others.

27. Become Protective When People Become Greedy

The opposite of Buffet’s philosophy is also true. When people become greedy, get out. Once you hear this stock/investment always goes up, this may be time to sell off and move on.

28. Avoid Investing Fads

Do not buy on hype or because your cousin-in-law said it is a good buy. Always apply fundamentals and a level head when taking any investment risk.

29. Do Not Invest in Something You Do Not Understand

Continually educate yourself sufficiently as a beginning investor. Do not put any money in the market until you understand the difference between blue-chip stock and riskier investments. You will begin losing money hand over fist.

30. Read Books and Educate Yourself On Investing

Take some time and educate yourself by reading personal finance books. You will thank yourself later.

 

Recommended: 3 Finance Books to Increase Your Net Worth

31. Identify Why You’re Investing

Do you want to become financially independent? Do you want to build a nest egg to retire at age 60? Identify your reason and allow that to guide you in your investing journey.

32. Focus On Your Savings Percentage

Start with saving 10% of your gross income. Each month increase it by 1% until you are at 25%. You must make lifestyle changes to hit this number. Once you can save 25% of your gross income, you can start putting some decent money away.

33. Understand Your Risk Tolerance

You will make different decisions at age 25 and 65. Know your risk tolerance and act accordingly.

34. Start With Broad-Based Investments

Start with broad-based investments like mutual funds or index funds. These are best for beginners and experts.

35. Trust Yourself When Making Decisions

You may not trust yourself in the first few decisions. Fear not. That will subside. Once you become competent, you will feel confident in your choices.

36. Keep Your Costs Low

Avoid high-cost mutual funds and broker fees. Use low-cost alternatives that will still give you the same results. Nearly all online brokers offer commission-free trading.

Frequently Asked Questions (FAQs)

Why Is Investing a Good Idea?

Saving money alone will not provide you with enough money to retire on in the future. Inflation is out of control, and the one way you can avoid inflation is by investing and growing your money.

 

Recommended: How to Avoid Hyperinflation: 20 Actionable Tips

Where Should You Invest?

That is entirely up to you. This article will help you start with investing tips, not financial advice.

Here are a few different areas you may consider investing in:

Recommended: 20 Best Investments to Make in Your 20’s

How Much Money Should You Invest?

For myself, as much as I can without starving. A personal question needs a personal answer. Ask yourself: How much am I willing to sacrifice so I can invest?

When Should You Invest?

I’ll leave you with a quote from the legend Warren Buffet: Be fearful when others are greedy and greedy only when others are fearful.

 

This article originally appeared on MaxMyMoney.org and was syndicated by MediaFeed.org.

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57 facts about money you probably didn’t know

 

Sure, you use money nearly every day, but how much do you really know about its power when it comes to income, wealth and retirement? The facts about how wealth operates in our world are not as clear as they might seem. It isn’t a simple matter of dollars and cents.

For example, did you know that wealth is shifting? For example, the “middle class” isn’t a static definition of a group of people; it’s a moving target describing those at the median income. That definition has changed over time as wealth has shifted upward and the rich have gotten richer.

Learn more about the middle class, income inequality and the shifts in wealth in the United States with the following 57 facts about money.

 

 

 

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Inequality is getting worse, not better. Income inequality has grown in every single state since the ‘70s.

 

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Prior to 1973, the top 1 percent claimed 4.9 percent of all income growth, but from 1973 – 2007 they claimed 58.7 percent of all income growth.

 

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As of 2018, there were 173.90 ATMs per 100,000 adults in the United States.

 

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Minting money isn’t just a turn of phrase. Coins are literally produced in a place called a “mint.”

 

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Apple makes an average $163.1 million every day — that’s $1 million every 8.8 minutes.

 

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But there’s one company out-earning Apple: Saudi Aramco. It makes $304.04 million every day, or $1 million every 4.7 minutes.

 

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Americans spend big on their pets. For 2019, it’s estimated we’ll spend $75.38 billion. That’s up from $72.56 billion in 2018.

 

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In the United States., the public debt in 2019 was $18.087 trillion, most of it coming from Treasury bills, notes and bonds.

 

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Most family fortunes are squandered within three generations.

 

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As of 2019, about 40 percent of Americans were not financially prepared for an unexpected emergency costing $400 or more.

 

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As of March 2019, there were 2,154 billionaires in the world.

 

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In 2018, billionaires’ wealth grew by 12 percent, or $2.5 billion per day.

 

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Meanwhile, the poorest 50 percent of people saw their wealth fall by 11 percent and live on less than $5.50 per day.

 

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Wealth is not spread equally between the sexes. Men have 50 percent more of the world’s total wealth than women do.

 

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Out of all the taxes collected globally, just four cents out of every dollar came from a tax on wealth.

 

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According to Oxfam, a 1 percent tax on wealth could fun schooling for 262 million children currently out of school.

 

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The richest person in the world is Jeff Bezos, with a fortune of $112 billion. One percent of his total wealth is about the same as the entire health budget of Ethiopia.

 

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A study discovered that the wealthiest people in Florence today are direct descendents of the wealthiest people in Florence 600 years ago.

 

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A researcher found that being wealthy could have a corrosive effect on someone’s morals, making people act more in their own interests rather than considering others’ needs.

 

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A study found that women who waited until 30 or later to get married earned more money. Women with a college education who waited until 30 or later earned more than $18,000 more than their counterparts who married younger.

 

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Paying with plastic is older than you might think. The first credit cards were used in the United States in the 1920s. Women, however, were not allowed to have their own credit cards until 1974. The Equal Credit Opportunity Act changed that, making it unlawful for any creditor to discriminate against any applicant on the basis of race, color, religion, national origin, sex, or marital status.

 

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Credit cards as we know them came about in the 1950s and today account for a large amount of debt. On average, a household with a credit card has $8,398 in debt.

 

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In 2019, consumer debt hit $14 trillion dollars, with $9.4 trillion being home debt and $1.3 trillion being auto debt. Another $1.48 trillion was student loan debt.

 

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Zimbabwe has the highest inflation rate in the world. In August of 2019, it hit 300 percent.

 

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According to the United Nations, there are currently 180 different currencies used around the world.

 

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The dollar is the most common type of currency, and the U.S. dollar is the most commonly used and recognized type of dollar in the world.

 

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Cryptocurrencies, which are entirely digital and include things like Bitcoin, have boomed in recent years. There are currently more than 4,000 cryptocurrencies available.

 

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It costs more to make a penny than a penny is actually worth. The U.S. Government Accountability Office estimates the U.S. Mint would save about $250 million in 10 years if they stopped making pennies.

 

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The TSA collects a lot of loose change left behind in security bins. In 2012, TSA collected $531,000. In 2016, that rose to more than $867,000. And last year, in 2018, it nabbed nearly $1 million in our loose change.

 

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Our paper money doesn’t last very long. A $1 bill will last about 18 months, a $5 bill 2 years, a $10 bill 3 years and a $20 bill 4 years. Coins, on the other hand, can last 30 years.

 

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The three richest men in the world — Bill Gates, Jeff Bezos and Warren Buffett — have more wealth than the bottom 50 percent of Americans.

 

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The richest 5 percent of Americans claim two-thirds of the nation’s wealth.

 

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Debt is a heavy weight on people’s psychological well-being, but medical debt is particularly bleak. While 86 percent of people with mortgages (home debt) were satisfied with their lives, only 64 percent of people with medical debt were satisfied with their lives.

 

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Debt is more than a financial burden. Most people with debt said they felt ashamed by it. Mortgage holders had the least shame – 57 percent said they felt ashamed. But credit cards hit 69 percent, student loans 70 percent and medical debt once again topped the list at 76 percent.

 

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Wages for the middle class fell from 2000 to 2017. In 2000, the middle class earned $45,826 in wages, while in 2017 they earned $41,640.

 

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While wages fell, the middle class did see an increase in their total income, from $64,280 in 2000 to $67,629 in 2017. This boost comes from an increase in government aid going to the middle class.

 

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Millennials get a bad rap, but they actually have the lowest average credit card debt among Americans. While 56.7 percent of Millennials have credit card debt, 67.6 percent of Gen X and 65.6 percent of baby boomers have credit card debt.

 

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Wealth inequality does not impact us all equally. The average white family has 41 times more wealth than the average black family and 22 times more than the average Latino family.

 

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Wealth comes from different places for different tiers on the social ladder. The wealthiest people get their wealth from stocks and mutual funds while the bottom 90 percent of Americans get most of their wealth from their homes.

 

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Work is not distributed equally. Among workers making the minimum wage in the U.S., 63 percent are women. Meanwhile, only 5 percent of Fortune 500 CEOs are women.

 

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Women tend to make up only a small percentage of the highest earners in every country, not just America. Across 88 countries, women accounted for 14 to 22 percent of the top 1 percent of earners. This survey was conducted between 2010 and 2014.

 

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A third of student loan debt is concentrated in the hands of about 6 percent of borrowers. That’s because that 6 percent owes more than $100,000 in student loans. Most borrowers owe less than that and nearly 20 percent owe less than $5,000.

 

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Graduate school is a particular burden for borrowers with student loans. Graduate school loans account for almost half of outstanding student loan debt.

 

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As of 2019, if you’re a kid in the United States, your average allowance from your parents is $65 per month.

 

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If Bill Gates tried to spend all his money he’d have a tough time. Even spending $1 million per day wouldn’t deplete his fortune for 218 years.

 

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For 2019, people receiving Social Security got an average of $1,461 per month, or $17,532 per year.

 

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About 20 percent of workers say they’ll probably never be able to retire and 19 percent of people 65 and older polled in 2017 said they were going to continue working full- or part-time.

 

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One way people are making up the difference in retirement savings is through IRAs. About 35 percent of households have a traditional IRA account, with another 36 percent having Roth IRAs for savings. Twenty percent of households were contributing to more than one type of IRA.

 

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While most of us envision retirement as hitting at age 65, more than half (55 percent) of Americans retire earlier, often due to health reasons or an unexpected job loss.

 

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Social Security may not last forever. It is estimated that without changes to taxes and benefits, Social Security will run out of money by 2034.

 

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We’re spending a lot on interest, about 5 percent of the money we take home goes to paying off interest. And across our lifetimes, the average American will spend over $600,000 on interest payments.

 

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Gambling brings in a massive amount of money in the U.S. Gambling revenue is bigger than theme parks, sports, cruises and music – combined.

 

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Medical expenses are costing us a lot in retirement. As of 2018, the average retired couple was looking at $280,000 in healthcare costs during their retirement.

 

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In 2019, there were 38.15 million American children living below the poverty line.

 

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The overall U.S. poverty rate in 2019 was 11.8 percent, but for black Americans that number was 20.8 percent.

 

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The concept of money has been around since before recorded history. It’s believed to have arisen as a medium of exchange as early as 5,000 B.C. and was usually in the form of attractive objects like beads, shells and various metals.

Aristotle said of the creation of money “When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.”

 

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Paper money is believed to have been introduced as official currency during the Song Dynasty in China during the 11th century, allowing for easier and lighter transactions than those with coins like the ones shown here. The use of paper notes by merchants in China dates backs even earlier, though, to the 7th century Tang Dynasty.

 

Read more:

This article was produced and syndicated by MediaFeed.org.

 

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