The decision to make a long-term investment is one of the best you can ever make. Many are however hesitant to make the first step, sometimes waiting for months or even years before making the first move. As daunting as it may seem for a first-timer, long-term investing makes it easier for one to achieve their goals within no time. Although the stock market may seem volatile at first, financial experts recommend diversifying your investment portfolio, especially on shares that perform better than hard cash. Here are a few tips on how to get started as a first-time investor.
1. Define Your Goals
The first step to succeeding as an investor is to know and define your goals. With clearly defined goals, you can determine whether to make short- or long-term investments. Many prefer long-term investment plans as they are easier to manage, have a reduced risk profile, and even better, allow them to save for a project several years to come, say your child’s future, retirement, or even a second home. Look for stocks like Edison : Does what it says on the tin.
2. Make Your Investments Regular
You don’t necessarily need lots of money to invest. Drip-feeding or investing what you can afford per month gradually is one of the best and proven methods of building a rich investment portfolio. Drip-feeding is effective because it allows you to buy fewer shares when market prices are high, and a lot more when prices are much lower due to market falls progressively. Little by little, the overall average price of the shares/investment will be considerably high, boosting your portfolio performance significantly.
3. Make Use of Tax Allowances
You could use your ISA (Individual Savings Account) allowance to boost your investment portfolio. Although you might not know this, ISA investments are tax-free, meaning you could earn much more in the long run. Considering 2022/23 tax amounts to about £20,000, interest earned from these shares can help you grow.
4. Keep Your Emotions in Check
It is always best to keep your emotions under control, particularly when/if the stock market falls. While this might seem too much for a first-time investor, this is normal for a seasoned one. Learn to keep your calm even when the market seems to shift against you.
This is simply put, spreading your investments. It entails putting your money on different assets, including bonds, cash and equities, to manage your risk level. With assets performing differently on the stock market, it is easy for one to take a plunge while the rest hit market highs. This way, your profit margin will be significantly higher even when one of these takes a hit.
The thought of investing almost always sends chills down the spine of every first-time investor. With the right approach, research, and realistic goals, you’ll soon realise how simple but rewarding it can be in the long run. Investments also make it possible to maximise your tax reliefs and allowances, making more money in the long run.