Disclaimer: The information provided here is not financial advice, and the writer is not a financial adviser. Readers should do their own research or consult a professional before making any financial decisions.
1. Get Mentors
Guidance was sought from multiple sources, including experienced friends who provided personalized mentorship, social media investors who consistently demonstrated profits and explained their strategies in detail, and articles from reputable financial websites. These diverse perspectives helped build a well-rounded understanding of investing.
2. Start with ETFs
Begin by learning what an ETF (Exchange-Traded Fund) is and understanding its rules. Take time to research a few main ETFs, their specialties, and their target markets. Some ETFs that are considered attractive include SCHD and SPYI. After doing your research, start with these ETFs — good ETFs are generally safer and are an excellent starting point for new investors.
3. Invest in Portions
When starting out, it is advisable to invest in small portions rather than putting all funds into a single investment. This approach helps manage risk and allows for gradual learning, making adjustments based on experience. It is important to take into account the steep learning curve as a new investor — waiting between investments is crucial to allow time for learning and reflection.
4. Learn Gradually by Theory and Experience
Both theoretical knowledge and hands-on experience are crucial for successful investing. There’s no way to learn solely from theory — it is necessary to ‘feel’ the investment, such as understanding the emotions when things go well or poorly. This helps evaluate whether too much risk has been taken on or if a more speculative approach should be considered. Likewise, learning only from experience without understanding the underlying theories can lead to mistakes. Gradual, step-by-step learning, combining theory and practice, is the optimal approach.
5. Balance Between Growth and Dividends
Seeing investments grow is great, but it is important to remember that throughout the history of investing, there have been periods — sometimes lasting years — when the market has gone down. During those challenging times, the only thing that can keep you afloat is a steady cash flow. This is why it’s crucial to prioritize dividends alongside growth. Dividends provide a consistent income stream, which can help you weather market downturns and maintain financial stability.
6. Be Part of a Community
Being part of a community, whether virtual or in-person, is invaluable for learning and growing as an investor. This could include WhatsApp groups, Facebook groups, or other online communities where people interact and brainstorm. These communities provide a space to get answers to questions, understand unexpected events like a sudden stock split, and engage in discussions that deepen your understanding of the investment landscape.
7. Research Every Investment
Before investing, it is essential to thoroughly research each opportunity. Read up on the company’s background, ask questions, and listen to others’ opinions. Hear what experts and other investors have to say, and only then make your investment decision. Taking these steps ensures informed choices and helps minimize unnecessary risks.
8. Think Long-Term
Warren Buffett once said, “When I’m looking for a stock, I’m thinking long term — at least 20 years.” This mindset encourages focusing on investments that have the potential to grow steadily over time, rather than trying to chase quick gains. Long-term thinking helps you remain patient and committed, even during periods of market volatility.
Summary
Investing as a beginner can feel overwhelming, but following some fundamental rules can make the journey more manageable and successful. Start by seeking guidance from mentors, investing in ETFs, and understanding the importance of investing in small portions. Gradual learning through both theory and practice is crucial, as is balancing growth with dividends. Be part of a supportive community and always thoroughly research every investment opportunity. Lastly, think long-term and remain patient, focusing on investments with sustainable growth potential. These steps will help you build a solid foundation for your investing journey.
