Us twenty-somethings aren’t always in a great position to start investing. After our outgoings have left our account, we’re lucky if there’s a little leftover to save. Some of us are keen to get on the housing ladder, while others just want a safety net of savings. When it comes to investing, it’s barely on our radar. However, that doesn’t mean it’s impossible. Quite the opposite. Investing is fairly accessible if you start small, and reduce your levels of risk. In this post, we’ll introduce you to the process, and put you on the right path.
Only invest what you can afford to lose
When done correctly, investing is relatively secure and stable (as we’ll explain further down). However, that doesn’t mean that making money is guaranteed. With that in mind, you must never invest money you can’t afford to lose. In other words, don’t drain your savings account to fund your investments. Don’t invest to make up for your losses. Build up a safe amount of savings first. Then start investing when you have a cushion. It’s just good sense.
A lot of millennials are discouraged from investing thanks to the scaremongering headlines. We often hear of brokers losing millions, and day-traders going bankrupt. These things do happen, but rarely to long-term investors. Look at any stock market graph over a period of ten-fifteen years. The general pattern is always an upward movement. Overall, the stock market goes up. There are daily – and even monthly – dips. But, if you invest in the long term, you’ll ride out the short-term volatility, and come out on top.
Spread your investments
There’s an old phrase in investing that always rings true. Don’t put all your eggs in one basket. In other words, don’t invest all your money in the same industry (let’s use the tech industry as an
example). And definitely don’t invest all your money in just one company. If that company (or the tech industry) crashes, it will take all your money with it. So, spread your investment into banks, retail, and currency too.
Invest in what you know
This is a simple, but essential, rule. If you’re going to invest in a company, you must know everything about them. What are their plans for the future? Who’s on the board? What are their projected earnings for the coming year? What are their future products? Why are they in the news? All these things affect stock price, and you need to know about it. Let’s say you invest in Facebook. In that case, you’ll want to frequent a fb stock message board, so you know all the essential information. If you don’t understand it, don’t invest in it!
Stick to blue chip stocks
If you’re looking to make safe and risk-free investments, stick to the big players. These are called ‘blue-chip stocks’. The likes of Apple, Google, Visa, Disney etc. aren’t going anywhere fast. They’ll ride out economic wobbles, and they’ll always rebound. Small companies and startups are always a risk compared to industry giants.
Investing isn’t as scary as it sounds, but it’s not something to take lightly. Do your research, and start small. Good luck!