What Beginner Investors Should Keep In Mind

While the pandemic has sent shockwaves across global financial markets, there are signs that suggest that now may actually be a good time to start investing your funds. The US economy is still in the process of recovery, but the stock market appears to have rebounded in late March of this year due to state re-openings. With a vaccine being in the works, investors are becoming more confident about the economy’s eventual rebound. Before making any financial investments, beginners and younger investors should keep a few things in mind:

Explore user-friendly apps

Nowadays, many finance apps have intuitive interfaces that are welcoming for new investors. Powered by artificial intelligence, robo advisors provide automated investing features that can make use of the spare change in your wallet, along with financial planning, wealth management, and a host of other features. The best part is that they’re relatively low-risk with options that have no account minimums and no management fees. Some examples include Ally Invest, Betterment, Stash, and Acorns.

Start with a small amount

One mistake that new investors tend to make is being overconfident and investing too much of their savings at once. It’s always a good idea to start small until you’re more knowledgeable about growing your investments. While the stock market is often a popular place to start, forex trading has a comparatively larger trading volume and lower market volatility. Some platforms also allow users to practice trading with a demo account until they are ready to progress to the next level.

Focus on reputable companies

In general, investing in well-known companies may lead to a greater return on investment. Due to the events of the pandemic, tech markets have seen significant growth, spearheading the recovery of the US economy. Companies like Microsoft Corp. and Apple Inc. have benefited from the rise of remote work, making digital growth more significant than ever. However, recent earnings show that their stock may have been overvalued, as the effects of the pandemic lessen. On the other hand, their profits tend to be more insulated compared to other industries.

Have short-term and long-term goals

If your only goal is to obtain immediate profits, investing may not be the solution to your problems. Creating a sustainable lifestyle involves being a diligent saver and invest as early as possible so that you make smarter financial decisions. It’s a good idea to split up your goals into short-term and long-term categories. Short-term goals can be met with bank CDs and savings accounts, and long-term goals can be met with more aggressive investments in financial markets.

Keep yourself updated on the latest news

Just like any other industry, keeping yourself updated on the latest trends and movements in the finance and business world can help you make more informed decisions. Things are always changing, so signing up to periodic newsletters from reputable news sources can help you get a broad overview of global markets. Safe havens like gold tend to be more attractive in times of economic uncertainty, so if you’re not sure where to start, most investors generally hold small quantities of gold.

While the world of investing may be intimidating for first-timers, seeking the advice you need and taking your time instead of jumping in headfirst is the way to find success. Starting slow, asking questions, and reading up on global events will give you a major advantage.