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How to Start Investing: Why Everyone Can (and Should) Invest

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How to Start Investing: Why Everyone Can (and Should) Invest

Investing is about making the most of your money, placing it in one or more different types of investment vehicles with the goal of growing your money over time. When people think of the word “investment,” they sometimes think it only applies to big-time spending. But the good news is that you don’t always need large amounts of money to make a smart investment, which means everyone can (and should) be thinking about how to make their money work for them. Whether you’re interested in stocks, bonds, or real estate, here are four tips on how to start investing:

Decide When to Start Investing

A lot of people go back and forth on when to start investing, but the simple answer is this: you can invest at any time, with any amount of money. If this is your first time investing, starting with a smaller investment may be a good way to become acquainted with the process; plus, you can always decide to put forth larger amounts when you’re ready. Additionally, developing an investment strategy sooner rather than later may bring you greater rewards over time. Before jumping into an investment right away, be aware that assessing your financial situation is key. It is not recommended to take on large investments when you have significant debt. If you are unsure of the status of your credit cards or loans, you can check your credit report by contacting any of the three major credit bureaus, including TransUnion, Equifax, and Experian.

Set Goals and Determine Risks

There is no one right way to make a smart investment. Everyone looking to invest has a different reason, goal, timeline, or level of risk comfort when considering a plan to fit their needs. Defining your own parameters before investing is an important step not to be overlooked. Whether you’re investing for retirement or saving for your first home, having clear objectives or a desired end result will help guide your decisions and help determine how much risk you’re willing to take on. Certain risks may come from factors like age, income, financial goals, or timeline. All investments involve risk in some way, but establishing a level of risk you are comfortable with will help you make smarter decisions.

Choose Your Investments

After taking the initial recommended measures for how to make a smart investment, it’s time for the fun question: Where should I invest my money? There are many different ways to invest, like putting your money in stocks, bonds, mutual funds, real estate, and non traditional options like art and antiques. Something important to consider is the power of diversifying your investments, placing your money in a balance of multiple vehicles to avoid “putting all your eggs in one basket.” By introducing variety to your investment portfolio, there’s both lower risk and higher potential for growth. If you’re ever unsure about your investment plan and need help diversifying, you can work with a broker or financial advisor for extra guidance.

Review and Adjust As Needed

Smart investors know that investing is not over after purchase: these assets require your attention, and should be adjusted or rebalanced based on performance. Watching over your investments doesn’t have to be a daily task, but being aware of both potential gains and risks over time is an important step in reaching your goals. For example, if you’ve invested in stocks, it’s a good idea to assess its individual performance and benchmark it against both its industry competitors and the market as a whole. Or if you’ve invested in real estate, check up on news about the surrounding properties or evaluate the location’s potential risk year after year. And if you find that an investment isn’t performing to your goals over a certain period of time, don’t panic: adjusting and rebalancing your assets is a completely normal thing to do to help you reach your goals.

Figuring out how to make a smart investment requires work and financial care. But as long as you have a thought-out plan and strategy to guide your decisions, you’ll find that investing in your future is easier than you thought possible.

Take the next step toward financial health

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