Investing for Beginners: How it Works, Where to Start, and What to Know
Monday, December 24, 2018, 6:00 PM | Leave Comment
Thinking of investing? You can make a lot of money on your own if you learn how to invest in stocks, but getting started can be tricky if you don’t have any background in business or finance.
Luckily, learning how to invest isn’t as hard as you think.
Here’s a breakdown of the fundamentals you need to know to get started and make your first investment.
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How Investing Works
Simply put, investing is the process of trading a sum of money in exchange for a larger sum in the future. Investments can be done through stocks or through assets. When you invest, you want what is known as a “productive asset,” meaning its value increases over time.
A commercial building, for example, is a productive asset. You pay a fixed price for the building, but the more stores and businesses that open in it, the more money you make. The building’s value increases over time, and you make more money than you initially paid.
When you invest in stocks, you are essentially buying a piece of the company. You are entitled to a share of its profits and can earn money over time as the business grows and earns more money. This is a major simplification, of course. Investing requires patience and research, but it’ll pay off when you are able to understand what you’re doing without getting scared off by financial terminology and business negotiations. There’s a lot to learn, but this is just the beginning.
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How to Start Investing
First, you have to decide how you want to invest. Do you want to invest in real estate, stocks or something else? There are many options, each with its own pros and cons. Understanding how different types of investments work as well as your starting budget will greatly impact the type of investment you make.
You’ll have to choose whether you want outright ownership or pooled ownership. With outright ownership, you directly purchase shares of a company. With pooled ownership, you invest in a mutual fund with other investors.
Shared funds make it easier for people to invest in larger companies since they’re able to acquire shares much larger than what they could afford individually. Whatever you decide on after you know all the facts, keep an eye out for what you’re looking for and investigate anything you might be interested in like “oil project investment opportunities”.
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How Much to Invest the First Time
In order to earn money, you have to give some. Usually, first-time investors spend anywhere from $500 to $5,000. Consider working with a robo-advisor like Betterment, which has no startup balance requirement and can walk you through the entire process of making your first investment for free.
Take your time to research investing. In order to truly get the most out of your money, you have to understand where it’s going, how it will be used and how you can maximize its value. Investing isn’t for the faint of heart, but you don’t need a background in business or a degree in finance to learn the ropes. Check out free guides from industry leaders to get started, and remember to save up while you’re in the process of learning how to invest.
As you acquire more knowledge, you can slowly accumulate a larger initial investment that will give you greater opportunity and, hopefully, a much bigger return down the line.
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Dixie Somers is a freelance writer and blogger for business, home, and family niches. Dixie lives in Phoenix, Arizona, and is the proud mother of three beautiful girls and wife to a wonderful husband. Dixie recommends looking into MLM companies like ACN to learn more.
