Management Corner: Investing Tips for Non-Investing Types

Management Corner

INVESTING TIPS FOR NON-INVESTING TYPES

The first step is the hardest. That’s certainly true when it comes to investing money. Where, how, when, for how long, what if I lose the little I have? These are some of the questions floating around, making many of us want to shelve the idea and just go back to work.

Investment advisors say getting started is the hardest thing to do. There’s fear of the unknown and intimidation that other people know more and worry that you’ll get taken advantage of. Yet, you know investing will help you have solid financial growth over time. The sooner you begin, the more time you have on your side.

If you hesitate because you’re not the money type, you don’t enjoy financial spreadsheets, or talking about percentages, net gains, and stocks, you may want to partner with a financial advisor. The best first step for anyone, and especially for someone new to investing, is to understand your goals, your vision for the future, and your concerns. An advisor will discuss those things with you and put a plan together that will help you maximize opportunities in line with your goals as well as help you conquer your fears.

It’s important to remember, no matter how uninformed or fearful you are, there are consequences for sitting on the sidelines too; including a smaller nest egg in the long run.

Investing is a tool for building wealth, but it’s not only for the wealthy. Anyone can get started on an investing program. You’ll want to avoid putting all your eggs in one basket, which is another way of saying diversification is good. Stock market index funds are an easy, diversified, low-cost way to invest in the stock market. When investors buy an index fund, they get a wellrounded selection of many stocks in one package without having to buy each stock individually.

One of the most well-known financial experts, Warren Buffett, who has a net worth of over $127 billion, says the average investor need only invest in a broad stock market index to be properly diversified.

The Standard & Poor’s 500 index, you may have heard it referred to as the S&P 500, is one of the best-known indexes because the 500 companies it tracks include large, well-known U.S.-based businesses representing a wide range of industries.

The Dow Jones Industrial Average is another index fund. This one has a collection of 30 stocks the editors of the Wall Street Journal decide represent the U.S. economy.

One of the key advantages of investing in index funds is they remove the challenge of trying to choose wise investments individually; their broadness means several sectors are doing well, while others may dip low, but overall, your funds continue to grow.

Emotions are often a big obstacle to getting started with investing. When stocks fall – and they will fall – you’ll lose money and no one wants that. But, they will also gain, and you’ll feel like celebrating.

The rise and fall of the stock market shouldn’t determine your attitude that day. You have to look beyond the daily numbers and develop a broad, long-range perspective. Investing in the stock market to get rich quickly is absolutely the wrong approach.

Starting when you’re young is always a good idea. People in their 20s and 30s are able to take more risks because time is on their side. Unfortunately, many young people either don’t think about investing, or they think they don’t have enough money to invest.

If you wait until you have a comfortable lifestyle, maybe in your late 40s or 50s, you’ve lost so many valuable years for growth. Even if you have $100 a month in your 20s or 30s, put it into some kind of investment. A small start is still a start. Over time, add to it. You’ll develop discipline for saving and you’ll see it increase over the years. Consequently, if you’re in your 40s or 50s and haven’t invested, it’s not too late. Start wherever you are and get some advice from a financial adviser you trust and who will work with you.