If you are keen to start investing but unsure about how to go ahead with it, there is no reason to be anxious. There are plenty of resources online that can make your investment journey less stressful and more rewarding. Investing is a large field and there can be a lot to learn when you first enter this field. The trick to becoming a successful investor is to keep learning and honing your skills.
Guide on How to Invest as a Beginner:
The main purpose of investing is to put your money into places where it can make more money for you. The basic investing types are the ones which beginners should seek to try out at first. While a newcomer can choose from different kinds of investments, these usually fall under a group referred to as “assets”.
Asset class is typically made of investments that have similar features and regulated by similar set of rules. Of these asset classes, the more popular ones are stocks or equities, fixed income investments or bonds, and cash or cash equivalent, like money market funds. Besides these you can explore other assets like commodities (gold and oil, for instance) and alternative investments like real estate, Forex, etc.
Alternative investments are usually less liquid compared to traditional ones. For example, unlike stocks which are highly liquid, private equities can be profitable only when capital is locked in for a period of time.
- Equity Investing: This refers to buy-and-sell of stocks in public traded companies and is a safe option for beginners. Companies usually sell shares to raise money for expansion and stock investors will buy stocks and shares to profit from the increase in its price. Dividends are basically earnings from interest on stocks that you own. Stock prices are impacted by company performances, competitors’ performance, industry performance, and government actions.
- Fixed income investments: These can be in debt securities which provide fixed-rate payments as interest over time. Debt securities are referred to as “bonds”. When you buy these, you pay for funding a company/government in exchange for which you earn interests. Zero-Coupon Bonds are bonds which do not offer regular interests as they are sold at discounted rates. So, investors can make profits by buying the bonds for lower values and then redeem these at maturity for their full face value. Bonds can be sold by municipal, state, and national governments; municipal bonds are preferred as they earn tax-free interests. Fixed income investments are ideal for investors who wish to plan for their retirement and have accumulated large capital during their work-years.
- Other assets: Whether it is Forex trading or commodity futures, these alternative assets provide increased leverage benefits. So, you can make a lot of money by using up only a limited amount of money. However, the downside is, leverage investments can also run into losses. So, as a beginner, if you are not familiar with leverage trading, it is better to avoid it to prevent loss of capital. At the same time, if you can learn how to use leveraged investments correctly, you can grow your money rapidly. When it comes to cryptocurrency trading, finding the most secure and reliable trading platform is challenging. Among various trading platforms out there, the Libertex trading platform lets you trade over 6 asset categories. Also, check out Libertex anmeldung und handel blog, which explains a simple and convenient way to make a profit.
Investors need to know what risk and opportunity are. These go hand-in-hand because investments with higher returns will always have more risks. Cash equivalent investments, for instance, are low-risk, and right for those who do have an appetite for risks. As a newcomer, you need to figure out your investment goals to make the right choice.