Are you looking to start investing but don’t know how? You’re not alone. Many people feel overwhelmed when they begin researching investment options. There are so many different types of investments, and it can be challenging to know where to start.
FinancialMappers has created an infographic that outlines the best ways to start investing. This outline is a great starting point for anyone who wants to build their investment portfolio.
1) Create a budget and goal list
A budget and goal list will help you determine how much money you can realistically invest each month. It would help if you also listed what you hope to achieve with your investment portfolio.
Do you want to retire early? Save for a child’s education? Build wealth? Once you know your goals, you can better select investments to help you reach them.
For example, if early retirement is your goal, you’ll want to focus on investments that offer high returns. If saving for a child’s education is your goal, investing in a 529 plan or mutual fund might be the best option.
2) Choose an investment account type
There are several different investment accounts, and each has its own set of rules and regulations. The most common investment accounts are Individual Retirement Accounts (IRAs), employer-sponsored retirement plans, and brokerage accounts.
You’ll want to choose an account type that best suits your needs. An IRA might be an excellent option if you’re looking for tax breaks on your investments. If you’re investing for retirement through your employer, a 401(k) or 403(b) plan might be the best choice.
3) Where to invest
Once you’ve selected an investment account type, it’s time to choose where to invest your money. Many different options are available, including stocks, bonds, mutual funds, and Exchange Traded Funds (ETFs).
Ensure you consider your risk tolerance when deciding where to invest. If you’re risk-averse, investing in bonds or a mutual fund might be the available option. If you’re willing to take on more risk for the potential of higher returns, investing in stocks might be the right choice.
4) Do It Yourself Route
Many people choose to invest independently, and there are several ways to do this. One popular option is to open a brokerage account and trade stocks yourself. Secondly, you can use an online investment platform like Betterment or Wealth front.
There are also some robo-advisors available that offer low-cost investing options. The DIY route might be the right option if you’re comfortable managing your investments.
5) Working with a Financial Advisor
Working with a financial advisor might be the best step if you’re not comfortable managing your investments. A financial advisor can help you create an investment plan and select suitable investments for your goals.
However, working with a financial advisor can be expensive. Some advisors charge flat fees, while others charge commissions on the investments they sell to you. Be sure to ask about fees before working with an advisor.
If you’re not sure where to start or how to choose suitable investments, working with a financial advisor is the best step to take. But if you’re comfortable managing your assets, using an online investment platform or robo-advisor might be better.
6)Diversify your portfolio
Once you’ve selected suitable investments for your goals, it’s essential to diversify your portfolio. Diversifying means investing in various asset types, including stocks, bonds, and cash.
Diversifying your portfolio can help reduce risk and improve returns over time. Ensure to spread your investment across a variety of different asset types.
There are several different ways to start investing, and the best way to start is to choose suitable investments for your goals and risk tolerance. Afterwards, diversify your portfolio across various asset types to reduce or manage risk and improve returns.
If you’re unsure where to start, working with a financial advisor or using an online investment platform might be a great option. But if you’re comfortable managing your investments, then the DIY route might be the better choice.
No matter what route you decide to take, remember that patience and discipline are essential for investing. Staying patient and disciplined is the way to attaining your investment goals successfully.
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought-after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.