For beginners, investing in the stock market can seem scary and overwhelming. You may think you need loads of money to begin with or that investing involves way too many inherent risks. By choosing a smart and diligent strategies, however, you can start building an investment portfolio that could put you in a strong financial position for the future. Here are five strategies to consider that can help you get started in the world of investing:
Start Saving Now
In order to invest money, you do need to have some to start with. Start by putting some money away every week for one year, and and use this as your initial investment capital. Take a jar or envelope, or better yet, start a savings account that is dedicated only to your investment. Put as much as you feel you can every month, even if it is a mere $10 to $20 per week. Over a year, that adds up to $500 to $1000, which is a great amount of money to start your investment portfolio.
Start With an Exchange-Traded Funds Account
Instead of investing all of your savings into one company, start with a diversified portfolio such as an exchange-traded funds (ETF) account. The initial investment can be substantially lower than it would be with big-name companies, making ETFs an ideal way to begin investing. ETFs are very diverse, so you may want to invest in one that appeals to a market you are interested in. When you’re first starting out, speak with a financial planner who can help you with the right avenue for investing in your first ETF.
Open a Roth IRA Account
A Roth IRA lets you invest a certain amount of money per year in an account that is tax-free, which can lead to huge savings. Essentially, you’ll invest money now, and when you turn 59 and a half, you can begin making tax-free withdrawals. Roth IRAs use mutual fund accounts and can offer flexible ways to save for retirement.
Be Aware of Risks
One of the most important things to consider when investing is understanding the risks involved. Only invest money that you can afford to lose if something happens to that market. It is highly advisable to hire a stock investment trainer to help you avoid scams and frauds that are often associated with smaller investments.
Choose the Right Stock
Just because your coworker or friend suggests investing in a stock doesn’t mean it’s the best strategy for developing your investment portfolio. Consider speaking with a professional to learn which stocks are valid and will potentially give you the best growth. A professional can help you see which stocks look favorable on the market now, such as the best marijuana stocks for your portfolio.
Investing in stocks shouldn’t be a scary endeavor. If you have a smart approach and take professional advice, then you should be able to begin building a strong financial foundation today and reap solid rewards in the future.
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All good tips Len!
It’s never to late or early to start saving. The ROTH IRA I found to be should beneficial through the years since you can use it as an emergency fund as well. Being able to withdraw the principal tax free and penalty free is a huge advantage. I think there might be a time limit before you can touch the principal?
Len Penzo says
Don: You can take out the exact amount of your Roth IRA contributions at any time, for any reason without having to pay any tax or penalty — but if you take a distribution any Roth IRA earnings before you reach age 59.5 and before the account is five years old, those earnings may be subject to taxes and penalties.