Contrary to popular belief, you don’t have to be an expert to start investing.
You don’t even need to be rich to invest, yet so many of us fail to get started managing our money because we’re intimidated or don’t know where to start.
However, investing is crucial. Inflation lops an average 3.87% off your money’s value every year, and investments are one of the only ways to grow your money fast enough to outpace it.
Investing takes on many different forms — from contributing to a tax-advantaged retirement account to buying stocks and investing in mutual funds — and it’s up to you to decide where to put your money.
To help you navigate the field of investing, here are 12 basics to understand before diving in:
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When it comes to the stock market, past behavior won’t always predict the future.
Looking at what the markets have done isn’t a reliable way to predict what they will do.
No one can reliably predict the market.While professionals can make educated guesses, predicting the market is predicting the future, and no one can do it, so don’t bother trying.
Investing is always a risk.
Little, if anything, is guaranteed when it comes to investing.
You could earn money or lose it, so if you’ll need quick access to liquid cash in the short term, you won’t probably won’t want to invest. Some professionals say you shouldn’t invest money you’ll need in the next five years, because if the market goes down, you won’t have enough time to recoup those funds.
You don’t have to be an expert to invest.
If your employer offers one, the simplest starting point is to invest in your office’s 401(k) plan. Next, consider contributing money to a Roth IRA or traditional IRA, and then you can research other investment platforms.
You don’t have to go at it alone: There are financial planners, wealth advisers, and robo-advisers to guide you.
There is also a wealth of information out there if you want to be a more hands-on investor. Check out some of our favorite books and podcasts that cover investing basics, strategies, and tips.
See the rest of the story at Business Insider
Source: businessinsider.com
12 basic things everyone should know before investing
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