With the number of investors in the millennial age bracket being precipitously low compared to previous generations, there’s sure to be room in the market for you. If you’re looking to get involved in investing, there are many ways to start building wealth for you and your family. If you pay attention to the basic “investing for beginners” tips, you can avoid some of the common pitfalls and see serious growth. Investing for beginners should start with these 7 tips.
1. Find A Few Sure Bets
When you’re first getting into investing, you might immediately be itching to get a high yield on a low investment. The problem is, that’s what everyone wants as well. Don’t expect every little investment you make to turn into a high-yielding, wealth-building stock. Start off by putting a little bit of money into a sure thing. Companies like IBM, Google, and major auto manufacturers aren’t going anywhere. Stock prices are high but they’ll be sure to steadily climb in your lifetime.
Make sure your money is invested in a few sure things that will bring in a little bit of money steadily. While it might not happen as fast as you’d like, you’ll certainly get more out of those investments than you would get from leaving your money in a savings account. Once you’ve found a few sure things to invest in, you’ve laid down the foundation for all of your future investments. Invest in those larger companies and forget about the money. It’ll grow steadily and leave you something to depend on a few years down the line.
2. Watch For Emerging Trends
In order to build wealth now, you’ll have to be a lot more diligent than just investing in companies that already have a major presence and a big name. To get the kind of returns that can build wealth, you’ll need to take some risks and invest larger amounts in small companies with the ability to expand.
The best way to do this is to watch for emerging trends on the market. There are lots of companies investing in biotech, like medical devices that can be embedded in our bodies and controlled wirelessly. These sorts of medical companies need a lot of money for testing and prototyping but once they’re off the ground can become billion-dollar enterprises.
You need to see what other people are investing in when you’re looking for new trends. Listen to interviews with people in the financial sector, podcasts about investing, and just ask around. Most people are willing to give advice if they have any to give. Getting other people to invest in a company with you gives it more value and brings more attention to it.
3. Play With The House’s Money
Once you’ve started making your initial investments, keep an eye on how much you’ve got out there. You need to see your money at least double before you take any action.
If you’ve invested $100, your value goes up to $200, and then drops to $50, you’ve only lost $50. If it goes up to $200 and you take out that initial $100, you can sleep easy knowing that you won’t lose anything from here on out. While it will take a little longer to climb back to that $200 figure, you won’t have as many emotions about the market’s ups and downs.
Make sure that you take some investment out every now and then. Lightning doesn’t tend to strike twice so if it strikes, quadruples your investment, and then plateaus for a year, don’t expect much change to happen. Most likely, your value will drop rather than grow.
Take a little bit out when you think your investment might have peaked. That way you’ll feel like you got something out of the climb. Don’t pull out entirely, as everyone’s value will drop together.
4. Don’t Expect To Get Rich
Getting rich with your investments shouldn’t be the goal. For better or worse, the people who do best in the world of investing are already rich or involved in the financial sector. They don’t have a lot to lose, so they can take risks.
It’s pretty common to hear the success stories and big leaps that happen in the world of investing. It’s much less common to hear about the people who’ve lost money or ended up bankrupt because of their investment strategies.
Your goal should be able to have an extra reserve of wealth to help with retirement or to pay for college for your kids or grandkids. It takes time to see a serious yield on your investments, which is why get rich quick schemes never succeed. The longer it takes for an investment to grow, the more reliable you can bet that investment will be.
5. Think Beyond Stocks
When you’ve got enough money to start investing, think beyond just buying stocks. Buying stocks from companies that have already achieved a modicum of success can help to earn you wealth but you’re not in on the ground floor. By the time the stocks are available, the company has grown far beyond its initial investment.
One of the best things you can do for other companies or for your community is to invest in new businesses instead of established ones. If you have a knack for investing in the tech industry, why wait until a startup that you feel excited about has a public option?
See if they’re interested in taking you on as an investor in exchange for company equity. A fraction of the company is worth far more than just a stock, which is a fraction of a fraction. Investing in a company early also allows your voice to have resonance. You can become a leader from day one and see that your investment is successful.
You can help direct the business through thorny issues the executives might be new to but which might be right up your alley. They’ll rely on you and think of you as much more than a shareholder. When you invest in a company directly, you build a long lasting relationship based on trust and mutual gain. Helping new businesses is the best thing any successful person with the capital to invest can do for the future.
6. Think Beyond Money
If you’re looking for ways to get involved with companies and build wealth, you may not want to just throw money at them. If you’ve got talent and experience but limited capital, you should think beyond just investing money. Investing your time and energy could be much more valuable.
Become a part-time advisor or temporary CTO for a company and you could work out a deal with them. Instead of working for a full-time salary, work part-time for a small amount of money and a large percentage of their stock or equity.
You’ll be more invested in seeing them succeed and help to build trust with them. Just investing money in a company allows you the opportunity to give them what they need, but if they don’t know how to spend the money, it could be a waste. Thinking beyond money could help you to offer the company exactly what they need to not just survive but to grow and to thrive.
7. Find A Mentor
When you’re getting involved in investing, no matter if you’ve been doing it for a few years or not, there’s undoubtedly someone more knowledgeable than you. You should think about finding a mentor to work with. Finding someone to just bounce investment strategies off of could be valuable for both of you.
When you’re seeking out someone as a mentor, make sure you have something to offer to them. Most people who are seriously involved in investing don’t have a lot of free time to spare. They have even less of a reason to give out free advice to anyone who wanders in off the street.
Start with the people you know and ask around to anyone who you think might be interested in taking on someone to advise. Be sure that you’re not just lazily looking for someone to tell you to do but that you have your own advice to share. Get involved with a niche of investing and learn as much as you can before you go out seeking a mentor. If you’ve got something valuable to offer someone in exchange for mentoring you, you’ll find that more people are willing to take you on than if you didn’t.
Investing For Beginners Take Patience
When you’re first dipping your toes in the water, you might be intimidated by the first couple of investments that you make. You might even lose money if you act too hastily at the start. Your best bet is to follow the tips of investing for beginners so that you can avoid a rocky start to what should be a positive investment experience. For more tips on investing for beginners, reach out to us to get started down the right path.