Beginning Investments: Learning The Basics And Building Confidence
Michael Ligon, Author, Serial Entrepreneur, Real Estate Investor, Stock Trader & cofounder of The Ligon Group.
Investing in the stock market can be an exciting way to grow your wealth, but it can also be intimidating if you’re just starting out. Understanding the basics, setting clear goals and choosing the right investment strategy are key to getting off on the right foot.
As a serial entrepreneur and investor, I’ve experienced firsthand the power of investing. My journey began when I realized that owning a business wasn’t always enough. I wanted to grow generational wealth through smart, calculated investments. I started studying the stock market and, over time, founded my firm, which focuses on both real estate and stock investments.
I wrote this guide to share the same foundational principles that helped me build confidence in my investment journey so you can feel empowered to do the same. This guide will walk you through what to expect when first investing, how to evaluate your risk tolerance and ways to build confidence.
Learning The Basics Of The Stock Market
Before you make any moves it’s crucial to get a handle on how the stock market operates. Think of it as laying the groundwork for your investment journey.
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Read up on stock market basics, explore different types of investments and get familiar with the factors that can influence stock prices. Whether it’s through books, online courses or financial news, arm yourself with knowledge.
While getting this education can empower you to make well-informed decisions and reduce risk, it does take time and, therefore, can seem overwhelming at first. My tips include setting aside a specific time each week for learning. Then, stick to this schedule. Focus on fundamental concepts first and avoid trying to learn everything at once.
Define Your Financial Goals
Setting clear financial goals is important to becoming successful. Are you aiming for retirement, a new home or making this your career? Your goals will shape your investment strategy and help you determine how much risk you’re willing to take. I’ve found that clear objectives can provide direction and keep you focused and motivated on what really matters.
Sticking to your goals can be challenging and may require adjustments along the way. Therefore, regularly review and adjust your goals based on life changes and market conditions. Too rigid of goals can sometimes limit your ability to seize new opportunities.
Choose The Right Brokerage Account
To start investing, you’ll need a brokerage account. This is your gateway to buying and selling stocks. Pick a brokerage that fits your needs, whether it’s low fees, good customer support or a user-friendly platform. It’s about finding the right tools to help you on your investing journey. Many brokerages offer resources and tools to assist with your investment decisions.
The drawbacks include how fees can add up, which can eat into your profits. The features can vary widely across brokerages. Make sure to compare fees and services across different brokerages before opening an account. Look for low-cost options and be aware of any hidden fees. Next, list the features that matter most to you; use this list to help you evaluate and choose the best brokerage.
Practice With Low-Risk Investments
Many beginners choose to start with lower-risk investments that tend to be more stable and provide a safer introduction to investing. This allows them to start learning and boost confidence without taking on too much risk.
Index funds or blue-chip stocks are often seen as more stable and provide a safer introduction to investing. This way, you can start learning and boost your confidence without taking on too much risk.
It’s important to note, though, that these low-risk investments typically offer slower growth compared to higher-risk options. You can gradually incorporate higher-risk investments as you gain experience and your comfort level increases.
Regularly Review Your Portfolio
Investing is an ongoing process. Just like with your goals, you want to regularly review your portfolio. This might mean rebalancing your assets or making changes based on new opportunities or market shifts.
You can use automated tools or investment platforms to streamline the process. I also warn new investors to avoid over-trading or impulsive changes; focus on long-term strategies, and only adjust your portfolio when to align with your goals or react to market conditions.
Stay Informed And Patient
Keeping up with market trends and financial news is important, but patience is key. Markets can be volatile and short-term fluctuations are normal. Staying informed helps you make better decisions, while patience allows you to benefit from long-term growth.
Market volatility can be stressful and staying patient can be challenging. Again, develop a long-term investment plan and stick to it. Avoid reacting to short-term market fluctuations. When staying informed, focus on key updates that impact your investment strategy rather than getting bogged down by every news headline.
Conclusion
Starting to invest in the stock market is a journey filled with opportunities and challenges.
I first got into investing while expanding my entrepreneurial ventures. As I built businesses, I kept hearing about the power of investing from figures like Peter Lynch and Warren Buffett. I needed to put my money to work beyond just my businesses.
Learning the ropes isn’t always easy, and there will be plenty of hurdles, but through persistence and study, you can develop strategies that work for you and your company. One challenge I faced was separating the noise from actionable knowledge. By sharing my experience, I hope to make your entry into investing smoother and less intimidating.
By following these steps and considering the benefits and drawbacks, you’ll be well on your way to making informed, confident investment decisions. Remember, it’s all about learning as you go and adjusting your strategy as needed.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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