When we start saving money, one of our first thoughts is to invest in the stock market even if we don’t know how to do it. But we need to be careful with this, the stock market can be a nightmare if you don’t know how to invest. so if you are planning to invest your money, here are some recommendations:
1. Order your personal finances
Before making any type of investment, you should order your personal finances. If you learn to manage your money in a disciplined and constant way, you will learn how to manage the market. Make a monthly budget taking into account your income and expenses, so you will know how much money you can use to invest.
Also, is recommended before making any investment you pay off the debts you have.
2. Investigate and ask
Nobody borns knowing. One of the first steps that you need to do when you want to invest your money is research. You can check blogs and posts, official investment portals of your country and ask agents who interact in the market.
It is a good option if you can research the products that could be an option for you. If you have the resources to hire the services of a professional advisor, then good, but it’s not strictly necessary. In this first stage, it is enough that you have someone who has some experience as an investor: a friend, family member, coworker, or simply the representative of a brokerage firm, who will present you with the options available to someone with your profile.
3. Start small
If this will be your first investment, it is a good idea to start with a small amount, at least until you get to know the market better. Later when you acquired more experience, you can go with more money.
Another thing that you need to take in count is don’t invest all your money, although you have decided that your risk profile is high, it’s not recommended that you allocate all your assets to invest in the Stock Market, remember that is money that you will not have for a period of time, and you need to think if you will need money for an emergency.
You can invest in different instruments within the stock market or you can choose to buy shares from different sectors and with a different size, to prevent losses caused by the fall of a specific sector or by the instability of the national market.
Don’t put all your eggs in one basket.
It means that it is good to see different investment opportunities to reduce risks. So in case one doesn’t turn out as you expected, you will not lose everything. Diversify your portfolio as you grow.
5. Invest only if you are sure what you are investing in
It’s necessary to explore the market basket of products well and identify which ones may be a good option for you. If you don't understand something then you must wait or ask, so you will not have surprises. Things that you have to consider when you are looking for a product are:
- Minimum investment amount.
- Expiration date.
- Rating risk
6. Think about your goals or needs
What amount do you want and can you allocate to the investment? Knowing how much your savings amount, try to make an objective estimate, even throwing conservative in case they are wrong.
Another thing that you need to ask yourself is What is my investment horizon? It can be 1 2 or even 10 years. A very common mistake is to invest savings that we may need in the short term. If I can need the money saved before 2–3 years, it is better not to invest it!
7. Be patient
The stock market doesn’t promise to make you rich overnight, especially if you are someone with no experience. Investment earnings require research and experience, so do not be discouraged if you are not achieving the amount you expected, keep trying until you do.