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The 5 Things New Investors Should Do First

New investors are born every day, but most wonder about the best way to begin. Checking out some of the larger brokerage websites can be a helpful exercise, just so you don’t get caught up in the advertising and hype. But there are many solid tutorials on the commercial sites and you can even use a trading simulator to try out your skills. First things first. If you’re new to investing, understand that there’s more to it than trading stocks. Some people are more comfortable with so-called conservative strategies like buying government securities and other traditional instruments. Whatever your investing goals, consider the following five points before moving into the world of investing.

Choose an Online Discount Broker

If you want to participate in the stock market, buy government bonds, mutual funds, exchange traded funds, and a host of other choices, you’ll need to open an account with a broker. Online brokerage houses tend to offer the best deals on fees, commissions and charting. Most of the better brokers offer you all the bells and whistles for a week or more with no obligation. That means you’ll be able to practice trading on a simulator, read informative articles about how to order and sell, and much more. Compare fees, commissions and all other costs very carefully.

Begin with a Long-Term Mentality

Unless you are trying to take investing on as a full-time career, stick to long-term goals. Going this route frees you from having to worry about day to day price fluctuations, economic news and other short-term considerations. Think about the big picture and invest accordingly. Most new investors get wrapped up in wanting to earn big profits in a year or less. In the real world, with rare exceptions, that just doesn’t happen.

Refinance Student Loans

One way to fund your new brokerage or investment account is through expense cutting on your monthly budget. Some people take on extra jobs so they can afford to invest more. There’s no reason to do so if you refinance your student loans. Be sure to find a reputable online lender who has experience with refinancing education loans. Not only will you get more time to pay in return, the refi will usually give you a lower interest rate and lower monthly payments, giving yourself more of a cushion on the expenses month over month.

Put a Small Percentage into Gold

Designate a very small percentage of your investment funds for gold. Don’t go overboard or you’ll be wasting your effort, time and money. Many of the top investors use gold as a hedge against losses because the metal’s price typically goes up when the market goes down. Think about placing two or three percent of your total discretionary funds into gold bullion.

Buy Savings Bonds

Long-neglected and often misunderstood, traditional U.S. savings bonds can be a key part of any long-term portfolio. There’s no need to rely on them for more than about 15 percent of the total, but do consider using these ultra-safe investments to add some solidity to your overall strategy.

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