For many, many years people have been investing in numerous things. Some of them were more or less successful. As a newbie, this whole process may appear to be a bit intimidating at first.
And that’s completely understandable, however, if you get your facts straight and get yourself familiar with some things, you can definitely succeed. Just bear in mind that you’re not the only one who is doing it.
A lot of people have done the same and have managed to turn their life around. With a little bit of patience, effort, and discipline, anything can be done. To help you out, we’ve put together some extremely useful tips. Let’s check them out together!
Important Things Every Investor Should Know
Your Net Worth Must Be The Primary Personal Finance Number You Care About
So what does the term net worth even mean? What does it represent? It is actually the total value of all the things you own, such as your vehicle, house, and stuff that can quickly be resold, along with the balances of your savings accounts, checking account, or any type of investment that you have.
Of course, you also have to take into account the things that you’re forced to spend your money on, such as student loans, credit cards, mortgages, and many others. The whole point is to focus on the money that you already have and how you can increase that amount.
There are so many different ways you can do it. For instance, you can start by paying off all your debts, stop wasting money on things you do not necessarily need, and find a way to enhance your income.
One of the best ways to do it is to invest. Now, if you do not have a long-term perspective about certain things, then maybe investing is not the best option for you for the time being, or if you think that your current checking account balance is more crucial than your net worth.
Understand The Stock Market
There are some terms that you need to comprehend before you even begin. For example, when people say that the stock market is being down or up, they generally think of the biggest market indexes.
Namely, this index monitors the performance of various stocks which either represent a specific area of the market or the market as a whole. For instance, if you’re interested in the South African stock market, you can check out JSE Top 40 index to see what’s currently going on. Generally speaking, investors utilise indexes to assess the performance of their portfolios and sometimes, to state their stock trading decisions.
Furthermore, if you want to, you can always invest in a whole index by using exchange-traded funds and index fund, or even ETFs which supervise a particular index or one sector of the market.
Providing New Investors With More Useful Tips
You Must Pay Off All Your Credit Cards As Well As Other High-Interest Debts
If by any chance you have high-interest debts, anything that’s over eight percent interest rate, then one of the best things you can do for yourself is to work on paying down that debt. Namely, you are going to save so much money just by paying off the debt from your credit cards.
As previously mentioned, paying off any of your debt is going to have a huge, positive impact on your overall net worth which will lead to its slow increment because nothing will hold it back. More importantly, all of this will lead to fewer monthly costs, which means that you will have much more cash to invest than you did before.
All in all, if you have these high-interest debts, you should prioritise them and pay them off as soon as possible before you proceed with investing. Not only will they provide you with a better return, but you will drastically enhance your monthly cash flow and enhance net worth.
Assess Your Comfort Zone In Taking On Risk
The ugly truth is that every investment comes with certain risks and that’s something nobody can deny. If you want to acquire securities, like stocks, mutual funds, or bonds, then it’s of huge importance to comprehend everything before you proceed.
Otherwise, you are going to lose a bunch of money. Generally speaking, the cash you spend on securities normally isn’t federally insured. What does it mean? It means that you could potentially lose the amount of cash you’ve invested.
This can happen even if you acquire your investments via a bank. Does it mean that you shouldn’t risk at all? Definitely not! Who knows, maybe if you invest some money, you receive an amazing investment in return.
Furthermore, if you have a long-term financial goal, it is highly likely you’ll earn more money if you smartly invest asset categories with bigger risks, such as bonds or stocks, rather than focusing on assets with less risk.
On the other hand, if you have a short-term financial goal, then you can freely invest your money only in cash investment. The biggest problem when it comes to investing in cash equivalents is definitely inflation risk.
Your Spouse Must Agree With Your Plans
Of course, this segment refers to those who are married. Now, if that’s the case with you, then it would be recommendable to talk to your spouse about your financial plans and see what he or she thinks about it.
Moreover, this conversation should cover three major points. The first one explains your goals. Why are you focusing on a particular investment? What do you want to accomplish with it? The second one should refer to the plan.
Did you create any plan that is going to help you achieve this goal? Do you think that what you’re doing makes sense at all and where are the accounts and whose name did you put on them?
If you do not have this type of conversation with your partner, then you will potentially cause a huge problem? How come, you probably wonder? Well, that’s because if your spouse notices that the money is slowly vanishing he/she will want to know what is going on.
Nobody can ever tell you what you can and cannot do with your money, however, it doesn’t mean that you shouldn’t be smart about it. That’s precisely why we’ve created these guidelines, to help you be and stay successful on this journey.