Investing can be confusing when you’re just getting into it. Thankfully, there are tons of new ways to invest digitally, from cryptocurrency to retirement plans, so that you can grow your portfolio with ease. There are also tons of money tips online, like the ones included in this article, that can help you find the right financial path for you. Some banks are forgoing brick-and-mortar stores to keep down costs and offer better rates, and you can access your entire portfolio from your phone and keep an eye on it on the go. Here are three great tips for new investors.
1. Determine Your Risk Threshold
New ways to invest, like cryptocurrency, have a reputation for having significant returns quickly. But these types of investments are high-risk, and you could potentially lose a large portion or all of what you put in. The stock market also contains tried-and-true stocks as well as newer, promising companies that could gain value more quickly. Retirement accounts like a 401k are low-risk with consistent gains, but you have to leave the money untouched until you reach a certain age. Take some time to compare your options and determine how much risk you are willing to trade for a potential reward.
2. Open a Savings Account
Not only do you want to look at starting investment accounts, but you want to make sure you have a savings account that will cover all of your expenses for several months in case of an emergency. When you keep your savings account funded, you won’t have to touch your investments when you get into a tight spot. This will keep your invested money where it should be, gaining in value. Lots of savings accounts offer small interest gains as well.
3. Get Clear on Your Goals
How you invest should be specific to you and what goals you want to achieve. If you want to save money for your children’s future college funds, you want a substantial emergency fund just in case you need to hire a car accident lawyer or need to make repairs on your home; for example, you will want to make different decisions than if you’re looking to increase passive income for yourself. Think of what your long-term goals are, and go from there.
Investing is not as hard as it seems. When you sit down and figure out your goals and budget, you can start making choices that serve you best in the long run. You can rest easy at night knowing you are taking care of yourself and setting up a great economic future.
