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Posted by: CIEL on Fri, Dec 21st, 2018

Guide for New Investors: 5 Crucial Tips for a Good Investment Strategy

You’ve come home with your paycheck, proud and happy that your hard work has yielded its first positive results and suddenly you’re accosted by a grandparent, parent, uncle, aunt, sibling, neighbor or just about any older person who looks at you and sagely declares “beta, invest your money.”

Sounds familiar?

What Makes Investing Not So Easy?

One – it’s not simple! Maybe you received other versions of advice, catchy ones like “let your money work for you” or “money in good hands stays and multiplies.” That’s fantastic advice, to be fair, but making money off investments isn’t as easy as ordering food online. If it were, everyone would be rich.

Two - there’s the risk factor. You’ve heard those lightning-fast disclaimers at the end of advertisements for mutual funds and the like about how “investments are subject to market risks”. So what if the opposite happens and you lose all your money? How do you know where to start and how to go about developing an investment strategy?

Well, that’s where we come in.

At the Centre for Investment Education and Learning we help both banking majors and students discover the art of managing their wealth well, so we really do understand the turmoil of being a new investor! And we think the simple but essential pointers below will set you off to a more confident start!

Here are our five top tips for new investors just starting out in the world of investments –

1.       Don’t Wait to Invest: You can wait after you invest. Even if you don’t earn much, take a small percentage of your income and put it something as simple as a recurring account. That will allow you to build your base while you focus on your job. Look up and stick to a simplified investment strategy that allows you to build towards a reasonable goal in the future.

But you must start somewhere, and the idea that you need huge sums of money to begin investing is an absolute myth. You can start with any amount of capital you have to spare as long as you are smart about it.   

2.       Explore and Diversify – Once you start to earn some more money, or your initial savings reach a large enough size, explore your options. You can invest in everything from shares, bonds, crowdfunding campaigns, mutual funds, property, and more.

Until you figure out your forte in terms of investments and pick your lane, experiment with different avenues of investment to see what works for your investment strategy. Don’t just put all your eggs in one basket, because that way you run the risk of losing all your initial capital and having to start again from scratch.   

 

3.       Accept Potential Losses as a Part of Your Journey – You need to make peace with this fact. If you choose to go down the investment path there is a chance that not all your outlays will bear fruit. Some may break even, some may even have to be written off. Markets always ebb and flow, that is just the nature of things, you can’t let the potential of losses hold you back, and if you do diversify as mentioned before, you can mitigate these losses.     

 4.       Follow Finance Trends and Do Your Research – It’s extremely important to keep up with trends in the finance and investment world. The difference between investing and gambling is information. So make sure to keep yourself informed, not just financial circles but technology, services, business and anything else you can potentially invest in. Use that information to help drive your future investments. Having a gut or instinct is great, but it is only after you do a little digging to see what the bigger story is, that should you take the leap and invest in new avenues.

For example, apart from having a great product idea a simplified investment strategy is essential for startups. They also need to acquire enough venture capital to turn that idea into a tangible, sustainable product, or else the investment will be a bust. So look beyond the idea and gauge the management’s capabilities as well.  

5.       Always Evolve – The only way to keep consistently winning through investments is to stay ahead of the game. Move early, try to hold on for longer and always, always try to improve your investment knowledge. The minute you think you know it all, your investments will begin to stagnate. Attend seminars, participate in workshops, take online courses, read a lot – do everything you can to maximize your potential.

If you want to begin to strengthen your understanding of investments and how markets work, take a look at the easy-to-understand online course on financial planning developed by subject matter experts at CIEL. Our courses help develop strong basics in investments, and the interactive course content goes a long way in retaining what you learn.

Your investment strategy will only work if you are committed, fearless, and smart. So start saving up and begin your investment journey today. 

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