A guide for dummies is a great way to begin your investment education as investing is a difficult subject to master. Although complicated, investment is essential. The sooner you start investing, the better; and the longer you invest your funds, the greater will be your profits.

Basics of Investing

Investing is putting your money in shares, financial projects, commercial ventures, property, and many others with the aim of getting a profit in the future. Investors, therefore, are interested in using their existing capital to create more wealth. In simple terms, their goal is to make their money grow.

When you invest your money in a company, you gain ownership of a small part of that company. You earn profits if the company grows and becomes successful. You lose your investment if the company fails to perform as expected.

You can invest in stocks, bonds, ETFs, or mutual funds. If you totally new to investing, you should stick to mutual funds and ETFs till you learn more about investing. When you are investing in a mutual fund or an ETF, you are investing in a collection of bonds or stocks.

For example, the S&P 500 comprises 500 of the biggest companies in the US. Investing in an S&P 500 ETF gives you ownership of a small part of all the 500 companies. EFTs and mutual funds are, therefore, a great way to not only build a portfolio, but also minimize the risks associated with investing.

Reasons to Invest

You must invest if you are interested in greater returns. Saving alone will not help you achieve your financial goals as the returns are much lower. Banks invest the money you save in your savings account and give you only a small percentage of their profits.

When you invest your money, on the other hand, you will be getting not a small percentage of the profits, but the entire profits. Long-term investment is, therefore, the key to wealth creation; it is a tested and proven way to making your money grow.

Here are two major reasons to invest:

1. Retire Early:If you would like to retire early, you should start saving money for your retirement at the earliest possible. Invest your savings in a portfolio comprising mutual funds, stocks, bonds, precious metals, and so on. When you are ready to retire, you can enjoy the benefits of the returns from these investments.
2. Achieve Financial Goals: Investing helps you achieve financial goals. It can help you build a house, buy a car, launch a business, fund your children’s education, and so on. When you invest, you will be earning a higher rate of interest than you would if you just keep it in a savings account. Your money will grow faster, and you can use it to achieve your goals.

Getting Started with Investing

If you are ready to start investing, here is a simple guide for you:

1. Set Your Goals:Ask yourself why you would like to invest. Do you have any aim or goal in mind? What would you like to spend your returns on? Commonly, people want to invest for their retirement.

Just remember that investing is not a get-rich-quick scheme. You have to invest long term if you are aiming at larger returns. So, the first step to getting started is to set some clear and realistic goals.

2. Money to Invest:The next major step is to decide how much money you would like to invest. You can and should invest 10 – 15 percent of your annual income for your retirement. If you have other goals, you should decide how much you should invest and for how long to achieve your goal.
3. Create an Account:Now is the time to create an online brokerage account. Several online brokers offer combinations of investment and IRA services. There are no strict minimum investment requirements and you can choose from plenty of options, suitable for small amounts. For example, you can start trading with OlympTrade India.
4. Choose an Investment Option:Make a careful study of various instruments and the risks associated with investing in them. You can invest in stocks, bonds, mutual funds, exchange traded funds (ETFs), and many others.
5. Create a Strategy:Your strategy depends on your financial goals, deadlines, and investment amount. It comprises a set of rules that you must follow, no matter what. Once you create an investing strategy, make sure that you stick to it.

Tips to Become a Successful Investor

Here are a few tips to become a successful investor:

1. Learn the Art of Saving:If you want to become a successful investor, you should learn how to live within your means and save a considerable portion of your income. Always remember that you cannot invest money you don’t have. So, in order to invest, you should first have money and you can get that money only by saving.
2. Be Realistic:Don’t dream of becoming a millionaire overnight. You should be ready to invest long term to get returns of up to 10% every year.
3. Be Patient:Don’t expect to make money quickly. Patience is the key and you should think in terms of long-term investment if you want to get any returns. Hold your investments for at least five years or even longer for larger returns.
4. Hold Diverse Portfolios:Diversify your portfolio to minimize risks. For instance, if you have decided to invest in stocks, invest in stocks all over the world, not just in your country. Or you can invest in a combination of assets.
5. Research and Study:Avoid investing blindly. Your investment decisions should come after thorough research and study. Never make an investment on the basis of a whim or because someone told you to invest.
6. Hold on to Your Assets:You may feel like quitting when your investments have plummeted, but that is the time you must hold on to your investments. Avoid selling when your investment is going through a bad phase; instead, think in terms of investing more.

Avoid Overtrading: Overtrading is fraught with risks. It could also lead to expensive mistakes. Also, you may have to pay extra transaction fees to your brokering service and higher taxes to the government. So, avoid overtrading with the hopes of making more profits; it just doesn’t work out that way