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Virtually every financial expert talks about investing, investing, investing!
They preach this philosophy for good reason. Investing is essential to building and maintaining wealth, and if you don’t invest, you probably won’t be financially successful.
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Anxiety about investing is completely normal, especially if you’re a beginner. But fortunately, there are ways to overcome that fear and get your investing life back on track. Here’s what experts recommend:
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Research and set goals
Start by setting aside time to research your investment strategy and set goals.
“I think one of the things that a lot of people fear about investing is the uncertainty and not knowing where to start. The more you understand about it, the less complicated it will seem upfront,” says David Kemmerer. , CEO of CoinLedger.
“Setting some goals for what you want to accomplish with your investments is also a great way to guide your initial choices,” Kemmerer says. “And I highly recommend setting both short-term and long-term goals first.”
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Read this book — at least
As you begin your investing journey, take the time to read and study easy-to-understand, deeply informative books on building and managing wealth.
Jay Zygmont, Ph.D., CFP, founder and CEO of Childfree Wealth, recommends picking up a copy of The Simple Path to Wealth: A Roadmap to Financial Independence and a Rich, Free Life by J.L. Collins. Masu.
Start small, even just with retirement planning.
You don’t need a lot of money to start investing. Keep this in mind and start small. Invest only the appropriate amount each week or month. You can also start by investing in a retirement plan.
“The best place to start investing is if you have access to a retirement plan at work, as the money is deducted from your paycheck and may be subject to matching contributions with your employer.” said Ashley Ritterhouse, financial planner and founder of Curious. Crow’s financial planning.
“If your workplace doesn’t have a retirement plan, you could consider opening a traditional IRA, Roth IRA, or tax brokerage account and setting up automatic transfers to that account, depending on your situation,” Ritterhouse says. Stated. “As you get more comfortable with investing, set goals to increase your contributions over time.”
Consider that you may have already invested
You may already be investing without even realizing it.
“If you participate in a 401(k) or other workplace retirement plan, you’ve probably already started investing,” Ritterhouse says. “Many people don’t realize they’re investing because they think investing means buying and selling stocks. Please review how you feel and try to increase your contributions to meet your goals based on your situation.”
don’t make it too complicated
One of the big problems with investing is that people who are new to investing tend to overcomplicate it and think of the stock market as a place where you have to constantly calculate and act.
But investing can be much easier than that, especially if you do it right.
“True investment success is best achieved with a KISS (Keep it Simple, Stupid) strategy,” said Robert R. Johnson, Ph.D., CAIA, CFA, professor of finance at Creighton University’s Heider College of Business.
Adopt a simple investment strategy
Implement a low-stress, easy-to-maintain investment strategy that will help you over the long term.
“People should invest in low-fee, diversified equity index funds and stay invested regardless of whether the market is going up, down or sideways,” Johnson said. “Dollar-cost averaging into index mutual funds and ETFs that mimic benchmark indexes like the S&P 500 is a great lifelong strategy.
“Dollar-cost averaging is a simple method of investing a set amount of money in the same fund or stock periodically over a long period of time,” Johnson said.
Know your risk tolerance
Don’t get into it headfirst. Please only accept risks that you can safely assume.
“It’s important to match your investments to the level of risk you can tolerate,” says Rittershuis. “If you take on more risk than you can handle, you may panic during a market downturn, sell your investments at the worst possible time, and lose money in the process.”
Know that market volatility is normal
Although it can be difficult, it is important to understand that volatility is a normal part of investing.
“It can be scary to see the value of your investments go down, but it’s all part of the normal market cycle,” Rittershaus said. “If you are properly diversified, you can expect your investment amount to increase on average over the long term.However, be sure to stick to your plan to continue investing even when the going gets tough, and you will need the funds you need in the short term. Please be careful not to invest in
Think of investing as an amateur sport
Perhaps the key to successful investing is to think of investing as an amateur sport. Johnson likens it to tennis.
“Investing is very similar to amateur tennis,” Johnson said. “The winner of an amateur tennis match is usually not the player who hits the most surprising ‘winner’, but the player who makes the fewest mistakes. If you can avoid big mistakes, which happen by not betting on individual speculative stocks, you can build real wealth in the long run. ”
Why not think about how baseball works?
“To use a baseball analogy, winning investors are often consistent singles hitters, not power hitters who swing for the fences,” Johnson said. “People who trade all the time and make big bets run the risk of making big mistakes.”
Talk to a CFP
If you’re not sure where to start with investing, or you still have questions or concerns, talk to a certified financial planner.
“If you need help with your studies, look for an advice-only, fee-only certified financial planner,” says Zigmont. “Advice-only CFP professionals are compensated for their time on an hourly, per-project, or per-subscription basis. Advice-only planners are a way to do it yourself rather than having you take it over. Our focus is on helping people learn.”
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This article originally appeared on GOBankingRates.com: Are you scared of investing? 10 ways to deal with fear and take the plunge
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