Let’s assume you have no idea about investing, how to do it or where to go. Why would you want to get started down this path and why the heck do it anyway?
Simply put you want that dollar to start having babies as soon as possible. Those babies will mature and grow up and have babies of their own. This is how you grow your savings into wealth.
If you are like a lot of people out there who go to work, spend money and just live to buy stuff, you may not understand this world of investing and what it can do for you.
So why do it and if I’m a beginner, how do I invest a dollar?
Let’s start with some of the reasons this is a good idea:
- you want to retire someday
- grow that money (let it have babies)
- the future is unknown, prepare now
If you don’t invest your money it just won’t grow very fast. Leaving it in brain dead savings accounts or locking it away in dead end GICs won’t get you very far. Matter of fact after you factor in inflation and taxes your actually going broke. Going broke safely, but going broke.
Inflation in all it’s forms is your #1 enemy. It robs you of your future purchasing power. Think of what things used to cost 5-10 years ago. We all talk about it every time they raise prices on items we buy frequently. Think of the rising cost of electricity, water and your phone, they’re all going up every year. That’s why you have to invest so you can stay ahead of inflation and protect yourself against rising prices.
Put your money to work as soon as you can so they have a family and can start to earn you income. Here is an example of what can happen.
This is how fast your money will grow using a conservative investment rate of 6%. Whatever the monthly amount you can afford, it compounds over time. Check it out!
Try out these steps to learn how you should invest your money.
1. Start saving now.
You just have to start setting money aside as soon as you can. This is one of my favourite Warren Buffett quotes:
” I started investing when I was 10 years old, I wish I would have started sooner”
Warren is the greatest investor of our time so who better to listen to.
The more money you can set aside for investment purposes the better. Everybody is different but just look back at that table again to see how more can turn into better in a hurry.
Check out this Easy to Use Guide on investing.
2. Do your due diligence
Only invest in what you know. Don’t throw a whole lot of money into robotics if you don’t understand the industry and how they make money. Educate yourself and visit financial forums and other blogs that talk about and share investing experiences.
Check out these related blog posts:
- What is the best way to invest your money for retirement
- How to invest in stocks for beginners
- Books on how to invest in stocks-what to buy
3. Use an online brokerage
If you are really uncomfortable investing money on your own then pay someone to do it for you. The world of robo-advisors is an exploding industry and can make the world of investing very easy for you. I have never used one because I like to pick my own dividend growing stocks but robo-advisers can take out the worry for you.
I use the services of a discount broker like Questrade. All ETF purchases are free and you can buy a stock for as little as $4.95 a trade. Click on the banner to check them out. You need an investment account and this is one of the cheapest places to get one.
4. Where should I invest
This is going to depend on things like your risk tolerance and on when you need the money (think retirement).
This is not going to be the easiest thing you’ve ever done in your life so take your time before making a decision on where to put your money to work. In general, the questions you need to ask yourself are, do I understand what the company does? and do I feel comfortable investing in this company? You need to do your research but eventually you need to make a decision.
I am not an investment advisor so I can only pass on my own experience and make educational recommendations on what’s out there for you. If you have more questions or need clarification then seek the help of a professional certified investment advisor. I am comfortable doing this on my own but you may not be.
5. Track your portfolio
No need to go crazy and check on your investments every hour. As a matter of fact I would say this will drive you nuts and eventually crazy. Try to keep it every 3 months, so you know where you stand. You will hear all kinds of noise coming from the national news on what’s happening in the world but at the end of the day you have no control over it.
Stay focused on the long term retirement investing plans you have put in place. In the short term, your invested money can go down. This is a long term strategy so let that keep you motivated and strong.
6. Rinse and repeat
Now that you’ve taken the first steps and invested your first dollar you just rinse and repeat from now on. When you get more money coming into your account that you want to invest, you just keeping following the steps you followed to get here.
It may take some time to but give yourself lots of time to learn and gain confidence. The hard part is over and now you can watch your money grow. You can do this, it does get easier with time.
Have you started investing yet? What tips would you give a beginner who wanted to start this journey?
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