How to Start Investing
You have probably heard that the stock market is a great place to grow your assets. Or maybe your cousin is making a lot of money being an Airbnb host. Or a neighbor said the real estate market is the golden opportunity to build your nest egg for retirement.
Before you explore the myriad of opportunities to potentially invest, let’s first review some basics and assess what kind of investor you are.
The information below goes over the key principles that help you start investing the right way.
How much risk can you take?
Succeeding in investing is all about getting the most returns while mitigating risk over time. Different investment options have different levels of risk and returns.
You will ultimately want to choose an investment option that can help you achieve your goals with the right amount of risk.
So how much risk is right for you?
Two primary factors to understand risks
The length of time you want your money to be invested. This is crucial to evaluate the level of market risk you want to take. In general, the longer you can invest, the more likely you will be able to recover from losses, and therefore more ability to take risk.
This means how much risk are you comfortable taking. Risk tolerance can change as we age and change depending on our financial situation. Start with these two questions to understand your risk tolerance level:
- How much can you allow your investment to decrease before you are tempted to sell?
- How much money are you comfortable possibly losing in investment?
Understanding Investment Funds