How To Start Investing? 8 Steps To Success

Do you want to multiply your money? Find out what is worth investing in and what mistakes not to make at the beginning!

Do you dream about moving to a tropical island, not having to work for the rest of your life, and only watching how the numbers on your account multiply? Well, probably like everyone else. Unfortunately, the reality is not that colorful, and before you start making profits in investing, you just have to learn it. That is why I suggest how to start investing, where it is worth investing money, and what to be careful about at the beginning. I have learnt more from Broker.cex.io

If you are looking for a ready-made recipe for making millions by investing, I must disappoint you and say that there is no such thing. Investments are just like walking – if you don’t fall over, you won’t learn. So let’s take a little risk and try it yourself. Before you do that, however, I encourage you to follow 8 steps with me that will help you get used to your investments.

1. Find out what an investment is

Investment is different from consumption in that, instead of spending money on something that will serve you here and now, you spend it on a purpose that (perhaps) will benefit you in the future. The term “maybe” appeared here not by accident, because it means uncertainty. It is this uncertainty that comes with the risk of investing – you will gain, lose, or have the same amount.

The key to a successful investment is to find instruments that will allow you to achieve the highest profits. But how to choose them? I explain later in the text.

2. Determine how much you can invest

First, define the amount you want to spend on the investment. Don’t be tempted by a big profit and don’t put all your savings into it. You must have at least a small financial cushion that will protect you in case of unforeseen circumstances (e.g. illness, loss of job). Start with relatively small capital (e.g. 20% of your savings) and immediately take into account that you may lose this amount. It is to serve you so that you can practice how to invest.

3. Think about the risks you may face

Only saving is 100% safe. It provides a stable profit, but relatively small. If you want to earn more, you have to take a risk. Remember, however, that even these less secure instruments also differ in the level of risk.

So, analyze your situation and answer the following questions:

● How stable is your income? Is there a risk that you will lose your job shortly?
● How many dependents do you have?
● Are you the only earning person in the family?
● How Much Savings Do You Have?
● What happens if you lose all the money invested?
● Do you like to take risks or does it scare you?
● This way, it will be easier for you to choose which instruments to invest in. What do you have to choose?

4. Select the appropriate instruments

You can choose from more or less risky options. Check where you can invest small capital:

Treasury bonds – these are securities issued by the State Treasury. When you buy them, you borrow money from the state, and when the bonds expire, you receive it with interest due. They involve a small amount of risk, because you may not get your money only when the state is insolvent, and that is not likely to happen.

Corporate bonds – the difference between government bonds is that they are issued by private companies. They have higher interest rates but are associated with a higher risk. After all, the probability that the company will fail, not the state, is greater.

Mutual funds – a form of collective investment where you entrust your money to experts. You choose the fund variant – safe or more aggressive, and on this basis, specialists select instruments for your portfolio (e.g. stocks, bonds, currencies, treasury bills). You can watch how your money is doing all the time, but it is mainly experts who follow and plan the appropriate moves. This is a good solution for people who don’t want to spend too much time on their investment.

Shares – these are securities thanks to which you become the owner of a part of the company you choose. If it makes a profit in a given year, you are also entitled to a dividend. Shares are traded on the stock exchange. Depending on how the company is doing and how the market reacts, stock prices fluctuate. You will gain if you sell them for more than you bought.

Currencies – Investing is tracking the rates of specific currencies and trading them when it is most profitable for the investor. It’s worth getting acquainted with the Forex currency market, which allows you to trade currencies 24 hours a day on business days. All transactions take place online. This market, however, comes with significant risks.
Cryptocurrencies – this is virtual money that you can trade at home. However, this market is not regulated by any central bank – it is created by the users themselves. You have to remember that investing in cryptocurrencies is very risky – you can lose a lot more than you have invested.

Remember one most important rule – never invest all your money in one instrument. If you hit a stock market crash or the insolvency of the company whose shares you bought, you could lose all your fortune. Therefore, when you choose what you want to invest in, break your capital into pieces. Donate some on safe instruments, where you will be sure that you will not lose anything, and invest some in places where the possibility of profit is higher, e.g. on the stock exchange or the currency market.

5. Learn from experts

When you’re just starting, it’s worth getting inspired by how successful people have invested. Of course, it will be ineffective if you completely duplicate their strategy, but you can see things worth paying attention to. I bet you will have a hard time finding the time to read all the stories available. That’s why I found a beginner’s position for you to start with. This is the story of Silicon Valley visionary Elon Musk, who you may know as the founder of Tesla. In order not to waste time, the publication is a free audiobook that you can listen to while driving or cleaning.

6. Learn from someone else’s mistakes

Now that you have learned about investment success stories, don’t forget about failures as well. They are even more important than spectacular victories because they bring you a real benefit – you will learn about the most common mistakes in investing. The ones that you should avoid at the beginning, so as not to lose your capital, are:

● investing all your money in one instrument,
● taking loans for investments,
● unlimited trust in an investment advisor,
● succumbing to emotions,
● investing “by feel”, without prior analysis.
7. Invest

Now that you know what to think about when you want to become an investor, all that remains is to put your plans into action. Depending on what instruments you have chosen, you can:

● open an account at a brokerage house,
● put money into a deposit,
● open a demo account in the Forex market,
● buy bonds,
● acquire foreign currencies.

8. Learn all the time
After you buy the securities, your path is just beginning. If you want to act alone, you still need to watch the market signals to be able to react appropriately. If you choose an investment advisor, you need to spend a little less time. However, in return, you have to regularly verify whether your advisor’s actions bring you the expected profits.

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