Investing 101 For Beginners

In this article, I will answer some basic questions about investment, such as

When is the Best Time to Invest?

How Much to Invest and How Much to Save?

How a Regular Investment Will Change Your life?

When is the Best Time to Invest?

“The best time to invest was 20 years ago and the second best time to invest is now.”

This is not my original line, I found it on the internet and this is one of my best quotes about investing.

If you missed investing 10-20 years ago because nobody told you to invest or you were too busy enjoying your life, there is nothing to worry about because you can start investing now.

The word investing can be so overwhelming because for someone who has never invested it will be very confusing as they don’t know where to begin.

Watch for the release of security deposits and treasury bills: Government and government agencies frequently release security deposits and treasury bills, which offer a guaranteed return for the minimum investment for one year period.

Watch the stock price: The stock market frequently goes up and down, watch the market, and if you see it has reached rock bottom, start investing.

Keep an Eye on IPO: IPO or Initial Public Offerings are primary shares offered by a company. The share price is very low in IPO. Try buying as much as you can

Home price has gone down: When the property price is down, that’s the right time to invest in real estate.

How Much to Invest and How Much to Save?

If you have the money you should invest because the return on investment is always bigger than the return on your savings. Investing is of course risky, however, considering the fact that you make a lot of gains, your risk is worth taking. However, when you are investing, you need to remember a couple of things.

You should always invest the amount or the market that matches your risk tolerance level.

You should never invest the amount that you cannot afford to lose.

You should diversify your investment by investing in various markets.

Preference should be given to investment; however, this does not mean you should not save. You should of course save money because you will need it for your daily needs as well as for emergency situations. If you invested all your money and if you need money for emergency needs, it will be a big problem. Therefore, you should also be prepared for situations when you need money. However, much money you need for your saving is the big question.

Generally speaking, your savings accounts should have enough money for paying your 3-4 months' bills. For example, if you need $1000 to maintain your lifestyle, you need $3000-$4000 in your savings. You should also save in high-yield saving accounts.

How a Regular Investment Will Change Your life?

Investment is not something like you cook food and it is ready to be served in 15-20 minutes. Investment is something like you planting a seed and waiting for years for the plant to give you fruits and in the meantime, you also continue watering and feeding the plant.

Let’s say you can only spare $50 per month. Instead of depositing this money in your bank account or keeping it in your wallet, invest in the stock market. Continue doing this every month. In one year, you will have $600 in the stock market. Generally speaking, the return on the stock market investment is 12-14 percent on average. By the end of the second year, you will have $1200 worth of investment and 12-14 percent returns on your investment.  When you invest every month, you are not only building your portfolio but you are also earning a return on your investment.

When you are investing, you reinvest your return on your investment (stock dividends), by doing this you will also save money on tax, and in the meantime, you will also compound your income. If possible also increase your monthly investment amount by 10 percent, or $55. In 20 years, you will have a lot of money.