Afraid To Start Investing? Read This First

Starting blocks

Afraid To Start Investing? Read This First

As someone who regularly invests in a plethora of things, I think it’s extremely important to start building your wealth as early on as you can. Whether you start by socking away a couple hundred dollars in a savings account or invest in your first mutual fund, wealth-building is something that everyone should be doing.

When I talk to my peers about investing, the biggest issue I hear about is that they are scared to invest money. Many of my peers are frightened that they will lose every dollar they put into the stock market, so they avoid it all together.

It’s really unfortunate that this is the misconception among individuals that are new to investing, and I always tell people two things when they ask for investment advice:

1) Invest in what you know

2) Have a long-term mindset

The first is important because if you don’t do your homework, there is a very good chance that you might invest in something that is well above your risk level, or even worse, the investment could be a total bust. Knowing what you are putting your money in is important. Try researching companies like Johnson & Johnson, or Proctor and Gamble, to gain some confidence. These are well-established companies that you will be able to learn about easily.

The second piece of advice is just as important as the first. If you are new to investing, it is imperative you have a long-term mindset. Set money aside that you wish to invest, but ensure you do not need this money any time soon—I’m talking five to ten years or more. This allows you to do two things: 1) Invest in companies that will have long-term growth, and 2) weather the risk of the market. Many well-established companies like those noted above have been around for 50+ years, and it is likely that while there growth may be slow, over the long term their stock price will increase. These are the types of companies you want to invest in. Following hot stock tips may yielding you a 100% gain in a week but there is also a very real possibility that you will incur a 100% loss just as quickly. Don’t try and time the market. A long-term mindset will also allow you to have piece of mind when the market takes a turn for the worst. Since you are in it for the long haul, you won’t get emotional about stock prices because you understand that while the market may see downward drops, the general trend is upwards!

What other investing tips do you have? Share them in the comments below! 

Janine is a young 20-something who is passionate about personal finance. She is actively pursuing her professional designations to make personal finance part of her career. Janine created My Pennies, My Thoughts to document her journey to financial freedom and help her readers get there as well! Join her as she tries to conquer the financial world by the time she's 25!