Beginning Investment: Tips for Newbies

If you've been considering beginning investment, you're probably feeling overwhelmed. There's certainly a great deal to think about: investment is not easy, and even the experts can lose their shirts. Fortunately, that isn't always the case: if you're just learning how to invest, you can focus on small amounts with, admittedly, small returns for a relatively safe investment.

Investing is a great way to save money for retirement or the future. It allows your money to grow much faster than if it was collecting 0.3% interest in a savings account somewhere. And depending how far you want to go, it can be a fun and profitable endeavor.

Investment 101

So without further ado, here's your guide on investing for beginners!

1. Determine how much you can afford to invest. If you're swimming in debt, this might not be the best time to be beginning investment. Focus on getting rid of your debt and then worry about savings. But if you're doing reasonably well and have a small amount that you can set toward saving on a monthly basis, investment is a reasonable option.

2. Decide on your risk tolerance. When it comes to learning how to invest, one thing you have to accept is that the more you risk, the greater your potential gain. Low risk investments don't return much. On the other hand, your initial investment is fairly safe. This is a personal decision, based on both your willingness to take a chance and your financial stability.

3. Learn the terminology. Before you speak to anyone professional, you should be able to use words like 'mutual funds,' 'returns,' and 'risk' -- the basic terminology of investment 101. Simply being able to say 'what's the risk factor?' instead of 'how safe will my money be?' makes you look more informed and like someone who can't be taken advantage of.

4. Consult an expert. You don't have to go to a broker or anything like that: just stroll into your local bank and ask for any information they have on investments. Most banks will also happily set up free consultations where they go through the different investment opportunities at their own bank.

5. Keep an eye on your investments. Your responsibility doesn't end when you sign the papers. Ideally, set up your investments to make automatic withdrawals on a monthly basis. If you're interested in becoming more proficient at investing, spend time watching your investments, seeing how they behave, and understanding what's happening to your money.

As you become more comfortable with this, you'll start to understand investment more clearly and maybe even become more adventurous, making bolder investments and more profits along the way. Or, you may be satisfied with safe investments that help you save effectively. Either way, you'll be moving beyond beginning investment and becoming a financial pro.

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