Thinking about Investing: When to Start
As the old saying goes, there is a first time for everything. Even though some investment pros might not want to admit it, they started out as beginners, too. As you begin to consider sailing the investment seas, there is a lot to think about and prepare for before setting sail in the stock market.
One of the primary questions from prospective investors is, “When is the right time to start investing?” Most any investment resource will tell you that now is the best time. From a financial perspective, the sooner you begin investing, the more opportunities you have to earn the returns you want, and a better chance at building a bigger nest egg. At the same time, it could be detrimental to take a “dive in” approach, and waiting to see what happens. It’s great to start as soon as possible, but make sure that the start you make is well-prepared and planned out.
Another concern, primarily for prospective investors who are college bound or college graduates, is any loans or debt they might have accrued (or plan to accrue due to college. In a sense, college is itself an investment, so there is no questioning the value of a college degree. However, this form of debt should not stop anyone from investing. Even fresh out of high school is not too early to start. If you have college loans to pay off, you do not have to pay them all off before you begin investing. Again, the sooner you start, the sooner you can start building equity – the important thing is to start with a plan in hand.
Thinking about Investing: How to Plan
Begin by determining your goals. Are you investing to make quick, explosive gains from the stock market for well-earned supplemental income or that dream vacation? Or is your decision to invest to build financial stability? Do you want investments for a future retirement fund? These are the questions each investor asks themselves in order to determine what their future investments will achieve.
Once the reason for investing has been decided, and an appropriate set of goals is established, it makes it a little bit easier to determine an appropriate investment path. Looking at what you want to gain will help you to decide how much risk you want to take, how much money to invest, and what types of investments to make. When considering options, investing in mutual funds is an investment opportunity with reduced risk, but it requires a long-term commitment to really bear fruit. By contrast, creating your own strong, investment portfolio will take at least three to four months, but stocks have a greater opportunity to yield returns at a faster rate.
When investing, it is important to remember to stay diversified to ensure that if any one type of stock fails you, all is not lost. Stick to your plan and remember your goals. Ultimately, always make decisions that work well for you and suit your lifestyle’s needs.