According to reports, 36% of Americans say that it’s going to take a miracle for them to retire.
If you want to build wealth and secure your financial future, it’s a good idea to start investing as young as possible. However, investing can be fraught with pitfalls, especially if you’re new to buying and selling stocks.
If you don’t keep your wits about you and employ a savvy investment strategy you could easily lose money rather than make money.
Avoid this and keep reading for our top investment recommendations for new investors.
1. Pay Off High-Interest Debt First
One of the most important investment tips to keep in mind is to pay off any high-interest debt first. If you’re getting excited about building up your investment portfolio, it can be easy to ignore things like credit card debt, and send all your free money straight to the stock market.
This is not a good investment strategy for the simple reason that high-interest debt is expensive. The longer you hold it, the more interest you will have to pay. The sooner you pay down things like credit card debt, the more you can save. Unlike potential stock market gains, these savings are guaranteed.
2. Get Clear on Your Time Frames
Another critical part of your investment strategy to get right is time frames. For instance, if you have a lump sum in your investment account that you are happy to put into stocks and let ride, this is very different from money that you might want to access in the near term.
If you’re saving up for a downpayment on a property, you need to ensure easy access to the money. You don’t want to put it into a volatile market, in case prices happen to plummet at the time you want to withdraw. Therefore, you’re probably best off placing your downpayment money into a savings account rather than the stock market.
3. Analyze Your Appetite for Risk
The general rule of thumb is that the younger you are the higher the risk profile you should have on your investment accounts. If you are older, you should expose your investment portfolio to less risk.
However, if you’re still young, you should also examine yourself and determine your personal appetite for risk. Even though it might make financial sense to open your investment portfolio up to a little more risk in your younger years—if this results in stress and keeps you up at night, it’s not worth it.
4. Diversify Your Holdings
One of the most common investment recommendations is to diversify your holdings. Diversification protects you from swings in the market by ensuring you don’t put all your eggs in one basket.
5. Don’t Let Your Emotions Get Away With You
If you’re managing your own investment accounts, it’s very important that you keep a handle on your emotions. When the hype is high, it can be tempting to get sucked in and buy a stock that everyone’s raging about. Or, alternatively, when the market sentiment is full of panic, it can be very easy to lose your head and sell at a loss.
Try to act with logic, follow a plan, and ignore the hype.
6. Seek Professional Advice and Investment Recommendations
If you’re new to investing, it’s always a good idea to seek out professional investment recommendations. Professional investment advisors know what’s happening in the market, and they can give you tailored advice for your personal situation.
Follow These Investment Tips for Success
No matter how old you are, it’s never too late to start building up an investment portfolio. Now that you know about these investment recommendations, you’re already primed for success.
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