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Ways to Learn to Invest, Even If You Don't Have a Wall Street Background

Starting to learn to invest is something that every adult should do. It's your money, make it work for you.

By Amanda StamperPublished 6 years ago 6 min read
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When you are looking to start investing your money, you want to make sure that you really understand what you are doing. There are many ways to learn to invest, but eventually you’re going to have to jump in and test the waters.

You need to ask yourself why you want to start investing, what amount of money you have available, and how you plan to go about learning the ins and outs of investment practices.

Every successful investor began somewhere. Usually, they began by learning the stock market, how it works, and where to find good investment information.

Investing your money can be a great way to generate extra income, plan for retirement, or save for other big ticket items like houses and college. The good news is that you don’t necessarily need a large sum of money to begin. It’s actually better to start small with money you don’t mind losing while you are learning the subtleties of investing in stocks.

Do you want to invest in individual stocks, bonds, or mutual funds? Do you know the difference about the risk involved in each and the potential for gains or losses? Research is your friend. Get yourself organized, and learn to invest as much as you can.

Know your budget.

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The first thing you need to do is to get to know your finances. You might have to rearrange some money, or adjust your budget to be able to afford to open an account and begin investing.

It can be difficult to free up money, but you’ll need to be able to find some disposable income to use when you learn how to invest. This can be tough with credit card payments and other loan debts that take priority in your budget. The good news is that you don’t need a ton of money to begin.

Educate yourself.

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Just like learning anything new, you need to understand the basics of how investing works. You don’t need a business degree to begin, but you do need to learn the basic vocabulary associated with investing so that the decisions you eventually make will be based on good information.

You need to learn the difference between the different investment options available. Do you want to invest in stocks or bonds? Maybe mutual funds are more your speed. Do you want short term or more long term investments? The only way to really figure out what type of investments you want to put your money towards is to learn. There are a lot of books and sites dedicated to putting out Investing 101 types of materials to help you become a successful inventor.

Set some investing goals.

After you have figured out how much you have to spend and have a grasp of the basics involved with investing, it’s time to set some goals. You should try to set some short term and long term financial goals. If your short term goal is to make some quick money to help pay for that vacation you’re saving for, you might be more tempted to undertake a risky investment with a chance of a greater return. If your goal is to save for retirement, then you’ll want some sort of IRA or other savings account where you can build up your money gradually.

Know what you are prepared to risk?

Keep in mind that investing can be risky. That’s why it is so important to set some goals ahead of time before you start putting your money in. Imagine this scenario: You decide that you want to take a big risk that could potentially turn into a large payoff. Are you prepared to lose all your investment money in a short period of time and be left with having to start from scratch?

Most brokerage firms recommend you have a diversified portfolio. This means a mix of risky investments with those investments that are more stable to keep your money working for you. After all, the end goal should be to have your money continue turning a profit.

Work with a broker.

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Sure, the lure of making your money all on your own can be pretty enticing. However, it’s smart to work with a financial advisor, even if it’s just on a short term basis. They can help you learn the ropes of investing and can give you some quality insights that only people with experience can give.

Just like learning the basics and doing your research, you need to learn about the brokers you might be trusting with your money. What kinds of fees are they going to charge? Are they willing to explain to you where your money is going and why? Do they offer any additional services beyond what you are already paying for? Again, do your research, and don't be afraid to try the best alternative investing services at your disposal.

Start small.

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There are many ways to learn to invest, but it's important to start small when you first begin. It can be tough for many people to even know where to begin if they feel they don't know how to invest when they have no money. Many investment professionals suggest that you start small. Think back to the days when you would put away a couple dollars here or there for miscellaneous reasons. Think of investing in this same way. Try putting away $5, $10, or $15 a week until you have $500 that you can use to begin your investment journey.

Think to the future.

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When you learn to invest, think about the future. What will people need somewhere down the road? Savvy investors who got into huge stocks like Amazon or Apple didn't really know that they would take off the way they did, but they saw the potential. Again, this is where research comes into play. Find out what niche might become more than just a fad and try to put a little of your money there.

Do your research.

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Just like needing to educate yourself on the ins and outs of investing, you need to do the same with where you eventually plan on putting your money. When you learn to invest, you probably don't know where to begin. Take your time to look at all the online and print resources available. See where other successful investors are putting their money and try to model their choices.

Think outside the box.

Before you start putting you money to work for you, try to think outside the traditional box of investments. Look at the trends and see if you can find a pattern that works for you. You don't just have to invest in mutual funds or traditional stocks. There are plenty of up-and-coming markets that are poised to make people quite a bit of money in the future if you can get in on the ground floor.

Start investing your money.

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This is where the rubber meets the road, and where the fun begins. You will have the option to choose the types of investments that best fit your goals. There really are a lot of options to choose from. The goal is to diversify your investments so that you have different areas where your money is invested. If you choose to invest your money into just one stock, then your success or failure is completely tied to this particular investment.

However, if you decide to invest in 7 or 10 low-risk investments for your money, then you’ll have a greater chance of seeing positive returns. A few of them might not do well, but the rest might become profitable, effectively hedging your profits.

Evaluate your investments and the market often.

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Don’t be afraid to pull your money away and reassess when things aren’t working the way you want. Remember, you’re not married to these investments, they are there to make money for you. You should always be evaluating your portfolio to make sure that it is working for you the way you want. When you learn to invest, it takes time and patience. Good luck.

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About the Creator

Amanda Stamper

Works in real estate but would rather be working on political campaigns.

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