Welcome to investing! You have visited us, The Regular Investor, because you’re keen to learn all about the world of investing. We have put together this small introduction to give you an idea of what investing is all about.
What is investing?
Investing, by definition, is the allocation of resources in order to benefit in the future. In this scenario, money is involved. Therefore, investing can be considered to be the allocation of money in order to profit further down the line. The aim is typically to grow your wealth into a larger amount.
What you need to understand about investing:
Investing is argued to be the most viable and effective method of growing your wealth. There is consistent proof to show stock markets have grown steadily, with over 100 years of data available to show that it is both worthwhile and a realistic technique to future profits.
And by definition, investing is simple right? You put money into whichever investment you choose, the investment grows, and you make a profit. Such a seemingly simple idea that everyone can do. However, if it was so easy, everyone would invest and make money.
Investing is all about risk/reward. When investing your money, there is always risk attached. The gains come from the level of risk you are willing to put your money at. It is possible investments can grow; in which case you can make a profit. It is also imaginable that an investment may lose value, perform poorly and even fail. It is not a fool proof method to easy cash.
Investing requires a strong consideration to the possibilities – both positive and negative. It is key to contemplate all the possible outcomes and the various implications on your financial situation. Despite the risks, investing can be extremely rewarding and should be something that everyone aims to be involved with.
Your Investing Journey:
Investing can be considered a journey. It is an ongoing process, generally for the long term (although that may differ for each individual). The journey can be full of ups and downs, and it is likely that you must be prepared to take the rough with the smooth.
It is almost impossible to predict how investments will perform. There will be times of prosperity and uncertainty as well as factors affecting your investment(s) which you could never prepare for. It is therefore key you continue to learn. By understanding where your money is going, the risk involved and the likelihood of your investment growing, you are more likely to succeed in your journey.
Investing is all about the future, and given the complexity, it is important to consider the following questions on your journey:
- Can you invest?
Are you able to invest? Can you begin to start today? Is it for everyone? Are you ready?
- Why you should invest?
Understanding your motivations as to why you wish to invest, setting suitable goals and being realistic about your expectations.
- What can you invest in?
There are plenty of ways you can invest your money. Whilst the stock market is the most popular option, it is worth considering which may be the best option for you.
- How much should you invest?
Are you looking to invest a lump sum? Regular investments? You need to decide the most suitable amount for you based on your situation, budget and goals.
- Where you can invest?
You will want to consider the possible places to invest. If it is in stocks and shares, which platform is most suited to you.
There are many more considerations when it comes to investing. However, having a fundamental idea of why you want to invest, where, how much and what you wish to invest in are a great start to that journey. Whilst it can seem daunting, the more you begin to understand, the more comfortable you will feel when you invest your money.
If you are a complete beginner, take your time to learn as much as you can before you indulge in your investing journey. For the more experienced investor, continue to improve your knowledge. Once you feel ready, it is time to start investing (if you haven’t already of course). Investing could be a key factor into a brighter future and is something you will not want to miss out on.