Getting Started In Investments – Part 2.
In getting started in investments part 1, we talked about the idea of starting you investment portfolio with a little no risk investing. Going along to your bank and investing your money in their savings account, fund market and CD, can be a nice little way to make a small amount of money. Although the best part about these no-risk investments is the fact that you will have the chance to learn a little bit about investments before you put yourself at risk.
In getting started in investments part 1 we also touched on the idea of devising your investment plan. Before you invest any money in the stock market you need to have spent some time working out your investment plan. An investment plan will be your road map to success, giving you advice and tips along the way. The best part about an investment plan is that it is your advice that you will be giving yourself. So at least you can trust that the advice in your investment plan isn’t tainted.
Your investment plan should include how much money you are willing invest in total. What type of allotments would you like to stagger this amount across? Do you want to invest in an industry that you already know about? Do you want to work with a broker? What type of bank account will you be opening?
Before you answer these questions you will need to devise your financial goals. You simply won’t know where you are going without knowing where you want to be. Your financial goal might simply be invest until I am ready to retire. But out of this goal you need to decide if you want to cash out a few times or to wait until your retirement date and start ending your investments then.
After you have devised your goals, you need to look at how much money you are willing to invest. This amount needs to be an amount that you could still survive if you lost. When you are deciding what amount of money you will be investing you will need to look at a few different factors. Firstly will you be using some of your savings? What were those savings originally for? Will you still be able to go on that holiday? Will your children now have to get college loans? It’s best not to cut yourself short, because it leaves you negative about the stock market.
You should leave between three and six months living expenses in your savings account. Recent research has shown that in most industries it takes between three and six months to find a new job if you have lost one. So this way if you lose your job, you will have enough money to survive, without empting your stocks.
Once you have devised how much you are willing to lose and how much you may actually need, you will be left will you current investment amount. Once you have your original amount you will need to devise how much of your income that you will put into stocks.
You should devise this before you begin, otherwise you may take too much out of your income once you get excited. This amount will generally be devised by looking at how much you had previously been able to save. Make sure you leave a little bit over for a rainy day!
In order to determine how much you will be adding to your investments you should plan over a long time period, say a five or ten year plan. You should also have a 12-month plan handy, especially at the beginning.
If you are having trouble devising your investment plan, you should enlist the help of an experienced financial planner. The financial planner will be able to look at your income, savings and goals and help you be sensible about your investments.
In the movies the stock market looks like a dangerous world that only the impulsive make any money in. But the truth is the serious investors have spent hours, days and months, planning and educating themselves in all things investments. A careful plan will allow you to just floating towards your financial goals, instead to rocking the boat every time your emotions tell you to.
