5 Things You Never Knew About Investing

How Do Investments Work?

Whether you have a little bit of extra income or a lot of extra income, investing is an option to consider if you want to diversify your financial portfolio. While making investments does not guarantee that you will make extra money, it is a way to potentially grow your wealth over time. However, if you are thinking about investing, you should do your research ahead of time so that you can make an informed decision before starting any investment.

Essentially, investments work by allowing you to purchase an asset that you can hopefully earn a profit from in the future. While investing can come with great rewards over time, you are assuming a risk as the investor. According to Acorns, the longer your money is in the market, the more time it has to grow. More growth could equal more money for you as the investor!

As previously mentioned, investing does involve risk, so there is no surefire way to earn money – regardless of whether you choose to invest in real estate, stocks, or bonds. Keep reading to learn five things you never knew about investing, and stay informed before you begin your investing journey!  

Can You Invest as a Beginner?

Absolutely! Investing can start anywhere, whether you are a seasoned investor or just a curious individual looking to make some extra money and pad their financial future.  Investing is a great way to grow your wealth and build financial security for the future. With the right knowledge and tools, you can start investing confidently and hopefully achieve success as your investments become fruitful.

However, if you are a beginning investor, it is important to be prepared for the market. Don’t go in blind! While it is tempting to start investing in cryptocurrency and all of the investing trends, it may not be as smart as you think it is. Although all investments come with risk, you should carefully analyze current trends and prepare yourself to handle the risk should things go awry. 

Don’t invest in the first opportunity that comes your way! Instead, think about the different kinds of investments. Whether you choose to get into real estate, collectibles, commodities, stocks, or even bonds, make sure to do thorough research and understand all of the risks and rewards before making any decisions.

You should also prepare financially by paying down debts and building some savings before you put your money into the less liquid market. It is a personal decision if you’d rather pay off your debts entirely or just get them to a more manageable place before you put your money into the market, and there are arguments for either option.

If you’d rather just make your debt more manageable before starting in on investing, look into consolidating multiple debts into a single loan. There are purpose built consolidation loans, but any loan that can pay off multiple loans can be used. Contact LoanMart to see if you can utilize your car’s equity to make your debts more manageable before going to the market. 

What are 5 Things You Didn’t Know About Investing?

Ready to learn 5 more things you didn’t know about investing? Whether you are starting from scratch or have some investment knowledge under your belt, these 5 things are important to know for your investment journey:

1. You Don’t Need a Lot of Money to Start Investing. In fact, starting when you are young is crucial and can often be more important than having a lot of money to begin with! If you can invest in stocks that pay you dividend yields when you’re young, you can take advantage of compound earnings, which can help you invest money over time and see the rewards later. Essentially, compound earnings refers to the investment returns that you can receive that don’t just involve the interest rate- instead, you can experience the effects of both interest payments and dividends, as well as the appreciation of your investments! 
2. Even Small Investments Can Be Worth Exploring. If you are hesitant to invest, then just start small! You don’t need to buy a home and flip it if you are scared of taking a big loss on the chin. Instead, start small and research stocks or bonds that pique your interest. 
3. Even “Smart” Investments are Not Always Profitable. While it is important to do research before you invest, keep in mind that there is no surefire way to make money when investing. You assume the risk as the investor, so even if you invest in the “best” or smartest choice, there is always a risk that it won’t pan out for you financially. 
4. Having a Plan is Important. Planning your financial habits may not be easy, but it is an important part of being a successful investor. Plan for where your money is going every month and where you are investing!
5. Don’t Forget to Save. While planning your investments should be a priority, it should never be a higher priority than saving! Make sure you are keeping an emergency fund tucked away in a high-yield savings account for a rainy day.