At first, blush, Investing may seem inaccessible and confusing. But it’s a fairly simple concept. Here’s the gist: Investors (like you) buy a piece of a company or lend money to a company (or to the government) in the hopes of making more money. The amount of money you make depends on how well the company does.
All the concepts and jargon can be easily demystified, and there’s no reason you should avoid investing just because it might be a little intimidating at the outset.
Nevertheless, you might still be hesitating because you have questions about what exactly investing is and how to get started. Check out my answers below to the 5 most common investing questions I hear all the time!
What exactly is investing?
Investing means using your money to make more money. Anything that earns you a return on your capital is an investment. Technically savings accounts are a type of investment because you earn interest on your deposit. However, because interest rates are so low right now, a savings account is not enough to grow your wealth over the long-term. In fact, if you’re putting your money in a savings account, it will actually be worth less over the long-term because interest rates are less than inflation. This is true of most GICs as well. For this reason, the best places to invest to actually grow your wealth are mutual funds, ETFs, or stocks.
How do I get started investing?
It’s never been easier or more affordable to access the Stock Market because you can do all of your money management online. In the past, investors had to work through a broker in person at their bank or over the phone, but now you can buy and sell investments with the click of a mouse.
Setting up a brokerage account takes about 1 week and requires an online application and cheque to seed the account with some starter funds. After that, you’re good to go.
How much money do I need to get started investing?
Most people are surprised how little it takes to get started investing in the stock market. You can begin investing mutual funds with as little as Rs.500 to Rs.1000
I suggest saving up RS 1,000 to start investing. You can start with more, but since timing in the market matters more than market timing. Besides, it’s better to learn how to invest and take your first risks with a small amount of money rather than your life savings. Remember, investing well is a lifetime skill, so you have time to take it slow!
What should I invest in?
What you should invest in depends on two things: your risk tolerance and your investment knowledge – and both of these are likely to change over time.
As a new, inexperienced investor, your primary objectives should be getting in the habit of investing, learning the language of finance, and getting used to watching the value of your portfolio fluctuate with the market. Index funds, such as mutual funds or ETFs, are best for this.
Where I can learn more about investing?
Many people think investing in the stock market is “RISKY” but it is true when you don’t know what you are doing and you don’t have a plan. Knowledge and Experience Financial Advisors can help you to maximize your wealth consistently in the stock market. To really gain profit in the stock market you must give much time in your education.
The more you learn about investing, the more confident you’ll feel managing your own portfolio, and the more you’ll be able to earn in the stock market. Happy investing!
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