The First Steps in Investing

a person stacking coins on top of a table

Investing is not a way to “get rid of money” or “invest it and expect a quick profit.” Investments require attention, knowledge, and time. They do not tolerate carelessness, so every stage, right down to choosing a financial literacy course, must be thought out and consciously chosen.

Money for Your Investments

The first thing you need to think about if you are planning to get into investing is what money you are going to put into the investment. Investing your last money in stocks or bonds or taking out your reserve for a rainy day is not the best idea. Remember that any investment is a risk, and it’s not worth risking your last funds.

You need to assess your financial capabilities and, based on this, choose what to invest in and how. First of all, make sure that you have an emergency reserve and funds for the first time that will be enough for at least the most necessary things. Then you can calculate what is left over based on your regular income. If you understand that your own funds are not enough, look for other options such as a loan from Payday Depot.

What to Invest In

There are three main investing directions:

  • Securities. The most profitable option for beginners since investments do not require large sums — most companies offer a low entry threshold. There are such options of securities as stocks, bonds, REITs, and ETFs.
  • Real estate. The purchase of any real estate, of course, requires large expenses, so this option is suitable for those who have accumulated capital. There are two types of real estate investments — buying living spaces and workspaces.
  • Business. This investment type is investing money in the development of a specific business. The investor can take one of two positions: active (the investor takes an active part in the work of the company or even buys it out completely) and passive (investing in a company’s securities and receiving profit in dividends).

Choose an Investment Method

Once you have decided on your goals and investment directions, you should move on to decisions. The first thing on your list will be choosing an investment method. Thanks to the popularity and development of the industry, you have the opportunity to invest either independently or with the help of a financial advisor.

A financial advisor is a professional, an employee whom you pay for the competent management of your finances. This role can be played by either an individual or a full-fledged team of professionals.

To choose a reliable professional, pay attention to the following factors:

  • Official licensing and reputation. Get familiarized with the previous projects and find some reviews from real clients.
  • Approach to work. At first, everything will seem extremely complicated and incomprehensible, so your broker should provide maximum comfort in your work. Make sure that the broker’s software through which you will trade and the training materials are as easy to use as possible.
  • Commission. An offer that is too profitable and reliable often hides a catch. Quite often, this catch lies in the high commission for each transaction you make. It can also come in the form of a monthly subscription fee, although this option is becoming less and less popular due to its lack of profitability in relation to particularly large or small investors.