UFCU SPONSORED CONTENT — Most of us were not taught how to invest money from our parents or in school. It can feel overwhelming, especially the first time you try it. If one of your New Year’s resolutions is to start investing your money, or if you’re simply interested in learning more about it, these six tips will help give you the confidence to get started.
1. Understand the Jargon
Understanding investment and finance terms will help you avoid feeling intimidated when you’re a beginner. The good news is that there are many resources online for financial glossaries and articles that break down frequently-used terms in easy-to-understand ways.
2. Know Your Limits
One of the biggest decisions for first-time investors is how much money to start with and how it impacts your other financial goals. You don’t need much money to make your first investment, but you need to clearly outline how much you’re comfortable starting with and stick with that amount.
3. Find Your Risk Type
When it comes to investing, there are two risk types: risk-averse and risk-tolerant. It’s important to know which category you fall under. When you’re risk-averse, you tend to be more comfortable with conservative options that hold low amounts of risk. Risk-tolerant is exactly what it sounds like — you’re more tolerant of taking some risks and will pursue investments that fall into the moderate- or high-risk categories. Generally, younger people have a more risk-tolerant investment portfolio. They become more risk-averse as they get older because that money likely needs to be withdrawn for living expenses in the near future.
4. Be Realistic
Investing should be seen as a long-term game and not as a way to get rich quickly. Apple stocks are often spoken of as ‘if only I knew then what I know now’ stocks because if a person invested when those stocks first became available, they would have made a lot of money today. But that’s decades! Set realistic expectations about how much you could potentially gain or lose from your investments, and make sure you’re comfortable with this (see tip #1 about knowing your limits).
5. Start Simple
There are a ton of options for investing, and there are new apps every day. It can be overwhelming. Start first with simple investments and only one or two at a time to become comfortable with it and understand how it all works.
6. And Finally, Invest
Last but not least is to make your first investment! Investing wisely and feeling confident in your abilities will take some time, but you can become a savvy investor with practice, knowledge, and a little luck. And remember, if you’re ever in doubt, ask for help from a Certified Financial Planner.
If you’re looking for more helpful financial tips and tools to better plan, spend, save, and borrow, check out PlanU by UFCU. You’ll find options from talking with a financial health expert to creating a personalized resource center to meet your needs.