Starting Out On Your Own, Building and Supporting a Family
What You Need to Know Before Making Investments
Date:17 March, 2021
Entering the world of investing seems overwhelming, but there are ways to get started with just a little money and a few tips. Here are some things you need to know to get started.
Determine Your Investment Goals
Are you looking for short-term gains or investing for retirement? Playing the stock market, for example, is a volatile investment strategy. While there can be significant short-term risks, investing in the stock market over decades typically provides a stable annual return. If you have time to let your money grow, the stock market might be an excellent option. Assess your purpose and timeframe for investing, as well as how much risk you are willing to take.
Understand Investment Options and How They Work
Do you know the basics about stocks and bonds, mutual funds, Exchange Traded Funds (ETFs), index funds, precious metals, and real estate? Do you know how to compare two similar investments to each other? These are skills you need before you begin. If this is something you are unsure about, pick up a book and give it a thorough readthrough for a better understanding before making any significant moves. It is also recommended that you consult a Certified Financial Planner or tax professional for expert advice based on your particular set of circumstances.
Learn the Differences Between Stock Exchanges
Different stock exchanges have different listing requirements. The Dow Jones tracks the value of 30 large companies, which tend to be blue-chip firms that are household names. The S&P 500 tends to be broader, representing companies from various sectors and industry groups. The Nasdaq Composite includes only stocks traded on the Nasdaq market.
If we were to only have one stock exchange in the United States, the barrier to entry would be high, keeping out many growing companies that need capital but do not meet the requirements.
Consider Investing in Your Employer’s Retirement Plan
If you are on a tight budget, an easy first step in investing is to enroll in your 401(k) or other employer retirement plan. You can begin investing with amounts so small you will not even notice them missing. If you do not have a 401(k), think about investing in a savings account or individual retirement account (IRA)(like a traditional or Roth IRA).
Knowledge is An Investor’s Best Asset
Pick a strategy based on the amount you will invest, the timelines for your investment goals, and the amount of risk that makes sense for you. If you are thinking about starting your investment plan with a savings account or IRA, let us help you plan for your future by contacting our Customer Service Department at 800-467-7216. Or, schedule an appointment with one of our experienced Branch Banking Specialists about how we can tailor a plan to meet your financial goals.