If you’re asking yourself this question, then congratulations! You’re about to take charge of building your wealth and letting your money work for you.
Investing can get rather complex and is certainly a daunting and overwhelming topic to fully cover. But on a personal level, it can be quite simple to handle too. There’s absolutely nothing wrong with creating a portfolio of assets and letting them sit in your brokerage account for as long as you want. But before you start, let’s go over a simple but crucial checklist to make sure you’re on solid ground.
Why Do You Want to Invest?
Investing is one of the best ways to steadily grow your wealth over the long term. If you don’t invest properly and have your hard-earned income sit in a bank account, earning only a small amount of interest each year, you’ll be losing out a lot over the years.
With proper investing, you can compound your money. In a number of years from now, it can grow to be a major portion of your personal wealth. Investing isn’t without its risks, but it is one of the surest ways to grow your money exponentially.
Making Investing Decision
Investing can be made simple, but it’s also not something you want to jump head first into without knowing exactly what you are doing. Take some time to educate yourself on the stock market and other financial assets. Make sure you are financially ready to allocate some of your income to investing. Finally, establish your investing time horizon and create some goals that you wish to hit. This will help you keep on track and can act as a map to help you begin your investing journey.
Here are some other steps you’ll want to take before getting into investing:
Make Sure You Have No Debt
If you have outstanding debt like credit card debt, student loans, or a personal loan, you’ll want to try and pay these off first. These types of debt generally have high-interest rates associated with them so your priority should be to clear yourself of these before you start allocating any of your income to wealth building.
If you act otherwise, you’ll most probably just be skidding your financial tires and any capital gains you make from investing will just be offset by the interest you pay on your debts.
Have Some Money Saved for Emergency Situations
While investing is great, there’s one more item on your to-do list before you build your investment portfolio: Set aside an emergency fund. Why? Because life happens! You’ll never know when your car breaks down or your house needs some repairs.
For times like this, you should always keep an emergency fund of cash that is separate from your investments. Don’t touch this fund if you can help it, because one day you’ll need to use it and you’ll be glad you kept it aside!
Plan an Investment Budget
Allocate a set amount of your income to investing. Even small amounts make a difference, but try and set a realistic but high amount. How much will depend on your income and your expenses, but investing 15-20% of your income is the typical recommendation.
Setting this number properly implies good budget planning, and actually being able to put the money into investments calls for good budget management, but we’ll leave it there for the sake of this article’s focus.
It may feel convenient to think that you’ll spend what you must spend on bills, groceries, rent, etc. over the month, and invest all that remains, but this is folly. It’s more likely that you’ll overspend and underinvest in this manner.
Research Where to Invest
Stocks can gain massive returns over time, but they can also bring losses. Even when you gain, not all stocks’ yields are the same. If you do have the time to research companies, then picking a portfolio of 15-20 different stocks across multiple industries is a decent way to build a diversified portfolio.
You can check out assets like ETFs or Exchange Traded Funds. These are essentially baskets of stocks or assets that provide exposure to a broader sector or index. Investing in ETFs won’t provide the same capital growth as investing directly in the stocks the ETFs contain, but ETFs will hold their value better in times of volatility, and you can still enjoy dividend payouts as you would, holding stocks directly.
Find a Reliable Platform to Invest
One of the more important decisions to make: where do I manage my investment?
Choosing a user-friendly, reliable platform with low trading fees is critical to your success. This is exactly why online brokerage platforms like gratis.io are growing in popularity amongst investors of all ages and experience levels!
Gratis.io is a Cysec regulated and completely digital trading platform that has no fees for market orders, deposits and withdrawals, custody, or real-time pricing. Join the waitlist today to gain early access to Europe’s most anticipated digital brokerage platform!