(Four things Investors need to know before investing)
1. Your financial status?
Your current financial situation is one of the first things that you need to reflect on to determine if you are ready to make a financial investment. Income, savings, debt, and living expenses are areas that show whether financial investing is a possibility or not. For example, if you have no debt, have a steady income, and a decent amount of savings, you may be ready to invest. A person with high-interest debt, a steady income, and no savings may not be ready to invest. Those are two simple examples but an individual’s financial situation can vary based on a number of different factors.
2. Your why?
Having a purpose is helpful in every aspect of life and investing is no different. Are you investing to make a quick “buck,” to build long term wealth, or investing to generate wealth for a major future expense like a house, higher-education, or a business. Determining your “why” allows you to figure out what types of investments you should consider investing in.
3. The type of investment?
Finding good quality investments takes time and effort on the end of the investor. You have to do your own research on the investment and draw your own conclusions on why the investment is worth your hard earned dollars ($). A quality investment depends on the area or field that you are investing in. For example, if you are investing in the stock market you may be looking at a company’s financial statements or with a mutual fund the prospectus (an investment brochure). For real estate, you may look at the average property value in the area, the potential mortgage payment, or the potential cash flow from the property. In all investments, you need to figure out the risk (potential loss if it fails) and how long you plan on investing in that chosen asset. The duration of your investment dictates how you are taxed on your investment gains. Investments that are held one year or longer are taxed at a lower rate than investments held less than one year. At the end of the day, you may not have the time or energy to thoroughly research investments but there different sources you can seek to invest for you (Ex: Robot-Advisor or professional investment/financial advisor).
4. How to access these investments?
There are different ways to access the stock market, real estate, and cryptocurrency exchanges. For the stock market, some common methods are through a brokerage account (an investment account with a specific company) or a robo-advisor (Ex: Acorns). Investors can access some real estate investment opportunities through a Real Estate Investment Trusts (REITs), crowdfunding sites, or hiring a real estate agent/broker. Lastly, Coinbase is a common cryptocurrency exchange for investors interested in crypto-investment opportunities. At the end of the article, there are two resources provided that give several ways to gain access to stock and real estate investments.
Your investing experience will ultimately be unique due to your personality and financial situation being different from everyone else. Remember there are plenty of ways to invest and plenty of resources to help you explore those opportunities. Happy investing!
Stock market
https://www.nerdwallet.com/best/investing/online-brokers-for-beginners
Real estate
https://www.investopedia.com/investing/simple-ways-invest-real-estate/
Disclaimer: Thegrownwave.com is a personal finance blog, not a professional investment advisor. The content produced from the blog is provided for free and only for informational purposes. Thegrownwave.com does not and cannot promise the accuracy and reliability of any content in comparison to your individual circumstances.
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