The Fundamentals of Investing

To say the world of investing can seem intimidating to first-time investors is an understatement. But the truth is that amateur investing doesn’t have to be overwhelming. There are a number of solutions, platforms, and helpful resources available to those willing to take a little time to search for and research them. But before diving into that world, it’s important to have a few strong fundamental investing principles to guide you along the way. Here are some simple tips to get you started.

Don’t Invest More Than You Can Afford

This seems like an obvious one, but a surprising number of investors put far too much money into investment opportunities. They see something they feel sure is a strong bet and they dump a ton of money into it. Or, they invest responsibly until they see big gains on a particular investment and begin to feel a fear of missing out on the next big investment opportunity.

But smart investing should never be driven by fear of missing out. Every experienced investor has missed on big opportunities. It happens all the time. And the mark of an inexperienced investor is to attempt to treat the investment market like a casino and push all of their “chips” (financial resources) in on a single investment or a few particular ones in an attempt to get an immediate reward. Like the casino, there is a chance you will hit big on certain investments, but this is fundamentally unsound. If you want to gamble, go to Vegas. The investment market is for just that: Investing money. If you are doing it for the first time especially, you should be particularly careful and take your time. Don’t be fearful; just be reasonable.

Plan to Invest for the Long Haul

Investing isn’t about hitting some crazy moonshot and making a bunch of money overnight. It’s about growing your money over time. You should have some level of belief in your investment, no matter what kind of investment you are making.

If you have money to play with and you want to day trade, knock yourself out and invest as you please (learn the ropes first, of course). But if you are trying to make sound financial decisions that will benefit you in the long run, plan for the far future, not for the next trading day. For most people, this is the way to go. If you have a financial advisor, speak to them. Otherwise, take the time to look into funds and stocks that offer the highest security and return over time.

It Isn’t All or Nothing

Often, investments simply perform reasonably well over time. They are neither huge money makers nor money pits. That’s as it should be. Extremes in either direction reflect volatility. That kind of volatility is great for those who make a bunch of money, but has also left plenty of people in dire financial straits.

Remember that it isn’t a binary dynamic between boom and bust. Don’t be disappointed not to see massive gains. Ideally, you will invest it and forget it, and reap the rewards of the long haul. Investing isn’t an all or nothing game; in its most responsible form, it’s just another way of wisely setting aside money for the future.


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