How to start investing for the future?

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How to start investing for the future is a common question in forums and other places. It is best to start investing as early as possible immediately after a person starts with job. This will help to take maximum advantage from investments.

How to start investing for the future and how

  1. Identify the amount one can invest in each month. This can be done easily by preparing a monthly budget. Write down the details in a piece of paper.
  2. Assess self on what all are the investment assets/products/instruments one has good knowledge about. It can be stocks, mutual funds, real estate, gold, government and private bonds etc. Make a note of the same.
  3. Learn the methods of investing in each product. I mean, if someone wants to invest in stocks, there are options to invest directly, through subscribing mutual funds, Exchange Traded Funds etc. In the same way, if want to invest in mutual funds, learn different types of mutual funds available to invest. There are equity funds focused on large cap stocks, mid caps, small caps, diversified, thematic, sector, international and other fund classes such as debt, gilt, hybrid, liquid etc. available to invest. Investor must have an idea about each type of funds, its risk and returns.
  4. Learn about how to find best stocks or mutual funds to invest. If it is a stock, how to find a best stock, what is the time to invest etc to be studied. This is same in the case of mutual funds too.
  5. Learn about portfolio models. It is nothing but creating a suitable portfolio by adding investments from various segments but in right proportion to achieve a goal within the focused time. There are different types of portfolios such as conservative, aggressive etc. Learn about the pros and cons of these portfolios to choose the best one suitable with the risk taking capacity and goals of investor.
  6. Read and read to get enough knowledge on everything what said above. There are good books, blogs, resources are available to gain knowledge. A best book for beginner investor to start learning is “Common Stocks and Uncommon Profits” by Philip Fisher. This would help to learn about the successful investment strategies to get succeed.

Investing in stocks? Things you should know about

  1. Stock market is vast and always volatile. Must learn about how to invest in stocks. Beginner investors must gain necessary knowledge as the first step of investing in stocks. Until ready to start direct investments to stocks, an investor can take the route of Exchange Traded Funds and Large-cap Mutual funds to get investment exposure.
  2. Once the investor is capable to make direct investments to stocks, start investing little at the beginning. At the initial stage, prefer only best known blue-chip stocks to invest. Never make a mistake of investing in penny stocks that comes with less prices and remember it is dangerous!
  3. To avoid loss and take benefit from Dollar Cost Averaging, invest small amount, regularly in each month than investing entire amount to a or few stocks at the beginning.
  4. Do not be hurry. Be patient. Learn about the difference of savings and investing. Saving meant to park money in a separate account to use whenever there is an emergency. Investing is the grow the saved money for long time by investing in different asset classes.

Things to remembers when investing

  1. You must know what stocks are best and why.
  2. You must know the right time to invest in the selected stock or stocks.
  3. It is equally important to know the right time to sell
  4. Never invest on one or two stocks but select best stocks from various sectors and invest to diversify the investments and reduce risks.

Major investment myths:

Investing in stocks for long time would make you rich – Yes if invest in the right businesses and right time and with focus. An easy way to find best company is, through ensuring the company and its business will exists and perform well during the investment horizon.

Here is article that help investors to select the best stocks through studying about the business, management and financial status.