Investing for the first time can seem like an extremely daunting task. Taking your money and playing it against the market can be risky as well as rewarding. The idea that you might lose some or all of the money you decide to invest can often scare people, especially young people, away from investing in the first place. So here are some investment tips for millenials to help ease some of that beginner’s fear and help you make the right choices in your early investments.
1. Start With a Plan
Start out by reflecting on what you can do with your initial investment. Determine how much you can invest, how much you can afford to lose, how much you hope to gain and how long you can wait to gain that amount. If you go in blind, without a plan, you’ll be much more likely to make the wrong decisions and act on impulse. When investing, this can be extremely dangerous. So work aggressively to create a solid plan before you make the first move.
2. Be Patient
Investing takes patience as well as planning. This is a long game and those who come into it expecting quick returns end up sorely regretting the decisions they made. When you’re young and lucky enough to be able to invest, you want to focus on things like retirement and education for your children. If these things are your focus, you will see the best returns over a long period of time. If you want to learn more about the importance of patience in investing, read this Forbes article.
3. Diversify Your Portfolio
Have you ever heard the phrase “don’t put all your eggs in one basket?” This one is pretty self-explanatory. Keep your risk as low as possible by betting on a wide array of stocks to avoid a major fallout if one company goes under. It’s also important to remember that a drop in the market doesn’t necessarily mean your investment is going to waste. The market is fragile and constantly moving up and down, so your long-term investments can still be fine after a quick dip! For more information, visit Fidelity’s Guide to Diversification!
4. Invest Regularly
Research has shown that investing regularly can often be more beneficial in the long term than trying to time lump sum investments based on market movement. So once you get started, use your savings to place smaller investments from time to time rather than throwing all your money in at once. This will increase your chances of having a steady flow of increased returns over time.
After you’ve invested your initial funds, remember that this is an ongoing process which must be continually nurtured for good health. So check up on your investments from time to time. Having a set schedule for checking your investments is always a good idea, for instance, weekly or monthly scheduled assessments. This ensures that you remember to check up on things and that your investments don’t end up lost in an unwanted place.