Investing is a large industry, and a proper guide is required to put you through the process.
Most times, many individuals take a deep dive into investing without equipping themselves with financial literacy and understanding how investing works.
The essence of this step-by-step guide to investing is to provide you with fundamental knowledge about investing and how to use your investment as leverage for profit.
Investing for beginners
Investing as a beginner begins with understanding the basics of investing; the different stages, types, and levels of investing, and practical ways of optimizing the investment process to your gain.What are the types of investment?
There are six major types of investment.
- Stocks and shares
- Exchange-Traded Funds
- Mutual Funds
- Index Funds
Different classes of investment include;
- Retirement Plans
- Certificate of Deposit
The numerous types and classes of investments allow you to select which category that proves easier to understand or any of them that you have basic or advanced knowledge on.
These different types of investments have different risk levels. Some are favorable for beginners without any knowledge about the trade, while some will require advanced training or the help of a financial advisor to guide you through it.
What are the five stages of investing?
Investing is split into different stages. Understanding these stages gives you a headstart on when to start investing and how to spread your plan.- Seed Stage
This is the first stage of investing. This stage incorporates the amount of money that you set aside for investment. This is the early development of investment as it includes all that regards funding the investment.
It essential that you thoroughly plan your investment seed stage. This should involve a put-away account. You split your savings and earnings into two; an untouchable reserve for investing and flexible savings for expenses.
This stage includes your first investment venture. As a beginner with basic knowledge of the industry, you could begin with low-risk investments before heading out to aggressive ones.
Now you have decided on what type of investment that you wish to venture into, you can proceed to decide if you wish to go for a long-term or short-term investment. This will help you plan your regular or planned investment strategy.
You get to decide how many dollars you set aside every month or earning period for investments.
- Strategic Stage
It is always a popular phrase that you should not put all your eggs into one basket. This stage includes your decision to diversify your investment plan. You decide how you can cut across different commodities; manage your portfolio, while keeping a strict check on profit and loss.
Not everyone gets the opportunity to head to this stage. This is the stage where you take high risks aim at significant profits.
Investing should be seen as a necessary wealth scheme for everybody, unfortunately not everyone has the basic resources, courage, and information to venture into it.
Nevertheless, while advancing in your investment journey, financial literacy and the ability to make accurate money decisions without emotional restrains is highly advisable.