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Health and Financial Wellness

Thinking Of Investing?
Avoid Big Losses With These Tips

Financial advisor talking with a couple in a cafe

You’ve heard from a friend that he started investing in stocks and now, he is trying to convince you to do the same. Thinking about it, it seems pretty cool. There’s some prestige in saying you’re a stockholder of a certain company, especially when it’s well known. And you don’t need a huge amount to start—for as low as PhP 5,000 and minimal paperwork, you can already register, start buying, selling, and trading stocks.

Most people would say investing is not for everyone. They’ll say, “Just because you can doesn’t mean you should”. It’s been a long misconception that investing is only for people with special knowledge and skills in investing. To some extent, it’s true, but everyone can learn and everyone can invest.

Investing remains as one of the top options you can consider if you want to grow your money, but take note that it always comes with risk. Signing up is just the first step among many, so you better gear up if you want to do it right, so you won’t end up gambling your hard-earned money.

Step 1: Invest in yourself

When we say invest in yourself, we don’t mean spending money for yourself. We mean equipping yourself with the right knowledge and skills so you won’t invest your money blindly.

To clearly illustrate how venturing into investing works, let’s use the analogy of learning how to swim in open waters. Many budding investors nose-dive into investing without really knowing how long they can last and how they can survive. They haven’t figured out if they can stand the water temperature, if there are sharks in the water, or if there is any life support in case of emergency. Apparently, there is danger in this.

Know what you’re getting into by reading up and consulting finance professionals. By being knowledgeable about what you do, you open yourself up to options and possibilities. Initially, you will know what stocks to pick, but you will also discover that there’s more than just investing in stocks. You can explore other options like bonds, mutual funds, and other investment vehicles. You will discover what kind of investment is suited to your tolerance to risk, investment appetite, and how investment diversification can help you manage these.

You also need to have the right attitude when it comes to investing. It takes a lot of hard work, patience, and discipline to invest right. Investing is a long-term commitment, so you better have the right attitude to make sure that you’re in it for the long haul.

Step 2: Come up with a plan

Investing is not for impulsive people. It involves strategic thinking and careful planning. Remember that nothing beats a man with a plan. First ask yourself, what do I want to get from investing? Do I want to earn my first million in ten years? Do I want to prepare for my early retirement? Your goal will determine the specific course of action you will take and how much time you will invest to reach your goal.

Being all gutsy with the risk-taking is only good to a certain extent because being reckless and going on a trial-and-error spree would cost you a lot. It is best to have specific targets specified in your plan that you can check from time to time. With a plan, you can set mini goals that you can use to gauge your progress. This will encourage you to keep your focus as you move forward.

Step 3: Consistency is key so stick with your plan

Along the way, you will learn and discover more about financial planning, money management, and investing. This is all good because it will expand your knowledge about handling your finances and investments well, but it could also get confusing. You will be presented with a lot more other investing options that will leave you both excited and overwhelmed. According to David Gass, a member of Forbes Finance Council, it is better to stick with your financial plan. You have to focus on your strategy and work your way to implementing it effectively.

The stock market, even the economy in general, may affect your investments, whether up or down. These movements may either encourage or discourage you from following your plan, or cause you to resort to making sudden changes in your investments by either panic buying or selling. By remaining consistent with your plan, you will prevent yourself from committing this mistake.

The only way to start investing is by getting at it, but it means getting at it in the right way. Conscious, skillful, and knowledgeable investing spells the difference between ending up losing and getting a real shot at achieving the financial goals you’ve set for yourself.