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Want to start investing the right way? Get to know the tips for first time investors, if you apply all of them you can start investing ahead of most people.
At first, you will know the most important tips for first time investors, from financial planning, goal setting, to choosing reliable brokers and diversification strategies.
Thus, you will be able to invest with security, strategy and confidence. So, keep reading, so you will know all the tips for first time investors that will make all the difference in your trajectory.
1. Define your goals and investor profile
This is one of the most important tips, so pay attention! Before choosing any asset to invest your money in, you must be clear about what you want to achieve. Your goals will direct your choices towards a more stable future that is aligned with your plans.
Once you’ve organized your finances, it’s time to think about your dreams and goals. The ideal is to separate them by term:
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- Short-term: travel, specific purchases, emergency fund.
- Medium term: change cars, do a postgraduate degree, open a business.
- Long-term: retirement, buying a property, ensuring the education of the children.
Having varied and balanced goals prevents you from focusing efforts on just one period of your life and forgetting about the others.
But it’s not enough to have clear goals, you also need to know your investor profile, that is, understand how you deal with the risk of losing money. There are three main profiles:
- Conservative: prefers security and predictability. Consequently, they prioritize the best low risk investments;
- Moderate: likes balance;
- Aggressive: has a higher tolerance for risk.
Knowing your profile helps you choose the most suitable investments for your goals and avoids frustration along the way.
2. Make an emergency reserve
What is the emergency reserve? Do you know that amount saved that saves you when an unforeseen event appears at the end of the month? The reserve is basically that.
When you don’t have a reserve, you run the risk of compromising the present and also the future of your family. It is this type of mistake that can lead you to debt and make any financial planning difficult.
How to get started? The ideal is to invest the amount in fixed income investments, which offer low risk and high liquidity, that is, you can redeem the money quickly whenever you need it.
Attention: the emergency reserve is not about getting rich, but about having peace of mind to solve problems. It will give you the security to follow through with your goals and continue investing without fear.
3. Exercise caution
If you are starting to invest, caution should be your inseparable companion. Before investing, research the asset well, see the profitability, growth potential. If you are investing in stocks, analyze the company’s growth in the last 5 years, whether there was a dividend sharing or not.
4. Do your financial planning
The first step to start investing is to do your financial planning. It will give you a clear view of your finances, showing you exactly how much comes in, how much goes out and where your money is going.
You can use spreadsheets or cell phone apps, the important thing is to keep the habit of writing down all expenses. With everything recorded, the next step is to answer these questions:
- What are superfluous expenses?
- Where can you save?
From there, you will be able to make your money left over at the end of the month, then create your emergency reserve and then invest.
5. Diversify investments for Tips for first time investors
If there’s one valuable lesson that great investors like Warren Buffett always reinforce, it’s this: never invest in just one place. In other words, diversify your investments.
By doing so, you increase your chances of profit, regardless of market swings. If one sector is down, another may be up, which helps balance the results of your portfolio.
6. Keep track of your investments and the market
Investing is just the beginning. To be truly successful, you need to track investment performance.
The ideal is to analyze the results, at the end of the month, or every 2 months, comparing the profit you had. In this analysis, you should ask:
- Is the investment delivering what I expected?
- Is the risk within what I accept?
This way, you will be able to make better decisions.
7. Look for a reliable broker (Tips for first time investors)
After choosing where and in which companies to invest, it is time to choose the investment broker. It is through it that you will carry out your stock buying and selling operations;
To choose a broker, look at the fees charged, services offered, whether they offer analysis, reports and stock suggestions.
Another point is the quality and stability of the trading system. A good system is fast, safe and reliable, after all, in the financial market, seconds can make a difference.
Some good brokers to invest in are:
- Interactive Brokers;
- eToro;
- Fidelity;
- Charles Schwab;
- Robinhood;
- Avenue;
- TD Ameritrade.
8. Avoid “investments of the moment”
When you start investing, you will see that the “new investment that is booming”, the “new wave” always appears. Whenever you see this, be suspicious, because most of these “opportunities” are actually scams, or just a means of trying to sell you something.
Focus on long-term investments, for example, stocks, real estate. These are the ones that will bring you the most return. Save it! There is no magic, nor a shortcut to have good results when investing.
Conclusion Tips for first time investors
Following the tips for first time investors that we present is the safest way to start the right way.
By understanding your investor profile, setting clear goals, building an emergency reserve, and maintaining portfolio diversification, you avoid common pitfalls and take firm steps towards financial freedom.
In addition, following the market, looking for good brokers and avoiding fads are attitudes that show maturity and responsibility with your money.
Take the first step, this is the most important, with time, dedication, studies and discipline, you will see the good results of your investments.