When you break it down, learning how to invest – and becoming good at it – is easy. You start with a simple plan and then stick to it. Over time, you develop the courage to add an appropriate amount of risk to your portfolio.
You’re already an accomplished reader, you know how to use the internet to get information, and you have enough income to put something aside for a rainy day. What’s next? Learn how to make the most of your savings. It’s not that hard. All you’ve got to do is put the same amount of effort into it that you’ve put into other challenges you’ve tackled in life.
The power of investing lies in the concept of compounding. The longer your time horizon, the faster your money grows. That’s why it’s essential that you get in the game right now.
It’s easy to put off getting started, because the idea of placing your life savings at risk can be intimidating. But you need to take a seat at the table and learn how to take small steps. As you gain experience, you’ll make mistakes and learn from them. By starting small, you won’t have to worry about getting wiped out. Indeed, it’s better to make small mistakes early on than to make the big mistake of starting too late.
Most new investors are cautious by nature, but that doesn’t mean they have to avoid taking risk altogether. In fact, it’s the ability to manage risk that separates successful investors from the crowd. When you’re in your 20’s or 30’s, you can afford to take risks with your investments because you have so much time to recover from downturns in the market. Once you reach your 40’s, the nature of the game begins to change. You can still take risks, but time starts to work against you rather than for you.
People often go to advisors for help with choosing which stocks to buy or which mutual funds to pick for their retirement account. That’s certainly something any advisor can do, but you can and should expect a lot more. Academic studies consistently show that investors who seek professional financial advice end up with more in assets than those who go it alone. In fact, over time the difference is substantial. Over a lifetime of investing (30 years), investors who had help with planning and managing their investment strategy accumulated 4 times as much money by the time they retired.
Seek out an advisor who can act as a true partner; someone who will help you build a long-term financial plan and show you what you need to do to achieve it; someone who’ll listen to your individual financial needs and goals. In other words, seek out someone who gets you, not just as an investor, but as a person. Then, take the time to build a long-term financial relationship. It takes a little more effort than settling for bare-bones service, but it’s worth it.