Investing Tips for Beginners
If you are just starting to research and look into investing, be assured that it is doable for people of all incomes and budgets. Some people get nervous about losing more than they can afford and assume that investing is for people with a bigger financial cushion. While having a bigger cushion is preferable, it is not a qualifying factor for successful investors. The following tips will help you build a plan for investing based on your budget and needs.
As a potential investor, you need to sit down and evaluate your resources and goals to find a starting point and the basic information you need to start investing. You need to have a clear idea of what you want your money to do for you and why you are investing it in order to choose the right type of investment plan- different types of investments will grow and save your money in different ways. You also need to assess the risk you are willing to take because this will also help you determine the type of investment you will make.
Types of Investments
Once you have evaluated your financial situation, needs and goals, it is time to choose what type of investment you are interested in making.
- Bonds – These tend to be more of a low-risk type of investment and also slower to grow. By buying a bond in a company or the government, you are essentially loaning them money at a (usually) small interest rate. People sell bonds to raise money for their company or the Government.
- Shares – This is a type of investment that is higher risk, but the reward will tend to be bigger and could be grown in less time. What happens when you buy a bond is you actually buy a piece of the company- you are now a shareholder and hold stake in that company so you will now benefit when that company makes a profit.
- Property – Property investments are when you buy land or space that you can loan or rent out. You can also buy a share in property based companies and development groups. These types of investments can be rather risky, but it depends on the type of property investment it is- some can actually be relatively low risk.
- Commodities – Investments in commodities such as gold, silver, oil, crops (anything grown, harvested or mined) is also a good way to invest via buying shares or stock in a mining company or farming company.When they profit you profit which makes the risk factor relatively predictable depending on who you invest in.
Direct vs. Indirect Investing
Once you decide on the type of investments you want to make, you will need to figure out if you want to invest directly or indirectly. This will make a difference in risk as well since investing directly means that you invest in one or two main companies while indirect investments (or pooling) will spread out the risk by putting your money in a pool that is invested in many different companies.
Tax Efficiency & Deals
Making sure you are paying the right taxes and not overpaying for investments can be tricky but it is important to figure that out. Investment services will help you figure out the best arrangement to be most efficient with taxes. Also, many companies will offer deals on different investment plans if you use their investment service. Deals for investment services such as this can be found at VoucherBin UK- www.voucherbin.co.uk.