Many people that are good at saving money can get a little fed up with rates of return that they are getting back on their cash, are being tempted to invest in the stock market instead. Although there is an element of risk, the rates of return do tend to be much better. But if you are a bit of a beginner to the stock market, or investing in general, then you might not have a clue where to start with it all. So here are some things to be thinking about, and the questions that you should be asking about investing, so that you can make your money do so much more for you.
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It is important to note that there are no guarantees when it comes to investing or the stock market. Your money can go both up and down in value over time. So, this isn’t about telling you what that investing is the right thing to do necessarily, but more about the information to help to get you started. It may be something that you need to do for a few years, simply because the longer you invest, the longer you will have to ride out your time if there any bumps along the way.
What is an investment?
Investing or making an investment is a long way from simply putting cash in a bank account where it will just sit and earn some interest. There is no getting away from the fact that making an investment can be a gamble. You don’t have the security of guaranteed returns, so it is important to remember that you are taking a risk with your money. The aim is to make a lot more than you put in, and that does happen, but there is the chance that you will lose some of what you put in too, and that happens as well.
You can invest in all kinds of things like:
- Shares
- Bonds
- Property
- Farmland
- Vintage cars
- Art (such as paintings and sculptures)
What Kind of Growth Can Be Expected?
This is something that people are looking out for and want to know the answer to, but the answer is that you can’t actually tell what you will get, and if someone thinks that they know the precise answer, then they are lying. But you can get an idea about what could be achieved, and looking for something like custom investor reporting could help you to keep track of things too.
Savings rates are at historically low levels for bank accounts, so there is definitely an incentive to look in other places for decent returns that is high. Of course, people would love to be making things like 5% on cash instead of 0.5%, but that would only be if you take the right level of risk that helps to suit you. So, some ‘golden rules’ for investing are things like:
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- If you want a really high return, then the more risk you will have to accept on your money.
- The old phrase of putting all of your eggs in one basket is true when it comes to investing too; so, don’t put all your eggs in one basket. Look to diversify your investment portfolio as much as you can, simply because it helps you to lower your risk. Different companies will perform differently, so hedging your bets can provide better results over time.
- If you’re look to save in the short term, then it is a good idea to not take too much of a risk. It is recommended that really, you should invest for at least five years, so that you can see how volatile the market is. If you can’t do this, then it is probably the best idea to steer clear of investing and just go ahead and have money in a savings account.
- Review your portfolio and do it regularly. You might have a share that is a bit of a dud or you might not be willing to take risks as you may have done before. So if you don’t review your portfolio pretty regularly, then you could end up with an account for your shares that loses a lot of money.
- One of the golden rules with investing is that you shouldn’t panic! Investments can easily go up as well as down. So, don’t be tempted to sell or even buy, just because you think that everyone else is doing so.
