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If you’re looking at investing for the first time, it is likely that you have no Idea what you are doing. It can be incredibly overwhelming to enter the world of investing and finance as a beginner – we've all been there. Here are 10 tips to help you as a beginner.

Automate Your Investments

There are various websites on the internet that will allow you to setup an automatic investment plan for each month. One example is Wealthfront. It allows you to invest in certain stocks, bonds, index funds, etc.

The best part of automating your investments is the small amount of maintenance that is required – you barely have to do anything. Furthermore, by investing at a constant rate, you avoid your portfolio being impacted greatly by market volatility.

Review Your Finances 

Before you invest anything, it is important to realize how much you are willing to spend on your total investment portfolio. Ensure that you budget correctly; be realistic, because you still need money to pay for your regular bills or loan payments.

It is important to remember that losing the money you invest is always a possibility, so you don’t want to be left without the ability to pay your bills.

Educate Yourself About Investing 

Once you have sorted your finances out, it is time to teach yourself about investing. Study basic investing jargon that is commonly used so you can communicate and understand how you are performing.

Moreover, research different means of investing – You might look into strategies such as dollar-cost averaging, or forms of securities such as stocks and mutual funds. Once you have started to build up your portfolio, the next step is to educate yourself about diversification, market efficiency, and portfolio optimization.

Set Goals 

All good investors have a set idea of what they want to get out of each investment that they place.

Do you want long-term or short-term returns? Depending on your answer, it would be prudent to consider various things, such as your age, personal circumstances, and your financial position. From there, you can dictate your goals around them.

Start Early 

The earlier you begin investing, the better your returns will be in the long-term. This means that the sooner you start, the less money you will need to continue investing to reach your desired investing goals.

Read up on compounding, because this is essentially what will happen to your investments over time. If you’re in high school or college, don’t hesitate. Just get started – you will be happy that you did in the future.

Consider Commissions

If you discuss potential investments with a broker, it is important to consider that they may be encouraging you to purchase shares that result in them receiving a high commission. Do your own independent research beforehand, there is no harm in being educated.

If you’re unsure about an investment, don’t invest or ask for a second opinion – safeguard yourself against dodgy brokers.

Retirement Accounts

There are some great tax benefits to having a retirement account. IRA’s and 401 K’s, in some cases, can have initial investments be tax deductible, which is a welcomed boost to your investing career. Some employers will match your individual contributions to your IRA, so ensure to find out if your employer has this process in place.

Diversify

The market is volatile – you don’t need to be an expert to know this. To avoid your portfolio losing money when the market takes a downturn, it is important to diversify. You’ll see stocks going down at some point, yet other stocks will be going up; diversity in your portfolio is key.

Overseas markets can also be an option for more experienced investors, as not all markets fall at the same time.

Study, Study, Study

It is crucially important to monitor and study your portfolio at the end of every week, or even every trading day. What was a good investment yesterday may not prove to be a good investment today or tomorrow.

The only way you can know if changes need to be made, such as closing a position, is to constantly check on the performance of your portfolio. Study what is working well and what is not, and make changes according to your findings – profitability and growth are key.

Read the News

The news will often give a brief insight into the markets and outline how the indices moved. Keep track of current events and you’ll start to pick up an understanding of why the markets are moving the way they are. Typically a news story, such as a natural disaster, will explain why some stocks or commodities have dropped in price.