Investing for Beginners | How to Start Investing in 2021, Step by Step

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3 years ago

In this video we’ll go over a quick guide to investing in 2021 for complete beginners!

Step 1: Before starting to invest you need to have completed 3 tasks:

- You have set up an Emergency Fund.

- You have paid off any High Interest Rate Debt.

- You have money on the side you will not need for the next 3-5 years.

Step 2: Set a goal

You need to ask yourself the following questions:

- Why are you Investing? Is it for a house downpayment? A college fund? Are you trying to build a source of passive income to retire early?

- What is your time frame? How much time do you have until you reach this goal?

- What amount do you need to have invested by the desired date?

If you answer these questions successfully, you will be able to work backwards to today and successfully determine the amount you need invested by now, and by the years to come, to reach your desired goal at the desired time.

Step 3: Decide what kind of Investor you want to be

Do you see yourself as an active investor, i.e. will you devote a lot of time researching different assets and deciding on which assets to buy and when? Or are you planning to take a more laid back approach? The type of Investor you want to be will determine the kind of assets you will purchase.

Step 4: Choose your Broker

You need to find a broker that provides you access to the assets you want to invest in. There are plenty of options online and in the form of apps in your phone. Research different brokers diligently, as it can be a pain to switch between brokers. Also, watch out for fees.

Step 5: Choose which Assets you will Invest in

This refers to choosing the Asset Class (Stocks, Crypto, Bonds, etc.), as well as the Specific Assets (Apple stock, Bitcoin, etc.). Stocks are usually a good starting point for beginner investors, as you likely have an idea of which company's products you'll keep using in the future, hence figure out which of those companies may have future value. HOWEVER, don't just base your investment decisions on your gut, but carefully research your choices.

Step 6: Tune Out your Emotions

When investing, you need to tune out all emotions, and rely on cold, hard logic instead. This includes ignoring what other people are doing and what the media are saying, and doing your own research instead, and figuring out for yourself if this is a good investments, and the risks associated with investing in that particular asset.

Step 7: Do your own research, Don't Rush!

It is always better to lose out on a week's worth of returns, than to invest in something early and then decide you've made a terrible mistake. Research each investment diligently, especially if you're an active investor, and only invest in assets you completely understand. A useful method, especially for new investors, is Dollar-Cost Averaging (DCA), i.e. spreading out the amount you're going to invest across 10-12 months. This method absorbs price volatility, and affords you time to re-evaluate your investments.

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