Five valuable pieces of advice for the first-time investor
A short guide
Are you looking for an investment vehicle that matches your risk tolerance? There are so many different investment opportunities: stocks, mutual funds, bonds, real estate, you name it, and you can probably invest. Each of these investment vehicles has a risk level that you should be aware of before investing. If you invest in commodities, did you know that you could lose more money then you originally invested? Know your downside risk before jumping into anything to make sure you are comfortable with taking that kind of loss. If your new to investing and need a little bit of inspiration, take a look at the following list of advice for first-time investors.
Set a clear goal
Before getting started, take a look at the amount of money that you realistically have available to spend and allocate to an investment strategy without putting yourself at financial risk, and then plan accordingly. Make sure you have a clear goal in mind of what you want to achieve, as it will help you to stay on course with your financial decisions, making sure they complement each other to work towards the same outcome.
Start sooner rather than later
Starting as early as possible with an investment strategy, no matter how small, will only benefit you in the long run. Long-term, slow-burner investment strategies often prove to be the most popular and fruitful, try to dip your toes in the water as soon as you can. Remember that doesn’t mean jumping headfirst into something you’re not 100% sure about.
If you don’t have the relevant funds available to invest with, you might first want to consider putting regular amounts into a savings account while you focus on your career.
Carefully consider your investment strategy
Thinking about the type of investment that you want to get involved in is another crucial step in achieving a successful strategy. Taking advice from others and assessing the markets are important steps, but it’s also important to choose a strategy that suits your lifestyle, and that you’re comfortable and happy with. Different viable options include growth investments, shares, and even property.
For the first-time investor, student property is a good example of an asset class that should have more predictable and sustainable levels of demand in the years to come. Not only is it relatively affordable (in comparison to other property types on the market) and demanded property type among young people, offering some of the highest average rental yields around, but the void periods are also lower than average, meaning you’ll have a much better chance of securing tenants (and in turn, an income stream) consistently.
RWinvest, a property investment company based in Liverpool offers these sorts of builds. Their students buy to let offering Poets Place, for example, is in a prime location in the city, and is one of the many attracting a steady flow of young people wanting to live and work in the area.
A great general rule of thumb for investors to follow when looking into establishing a substantial investment profile is to make sure that you try to diversify your assets as much as possible. Diversification is recommended by the vast majority of investment experts and is one of the best possible ways to ensure that your assets and finances are guarded in the event of an unforeseen shift in the market.
With property, for example, the most successful investors are among those that have a wide range of property types in a wide range of areas. This means that if a certain type of property decreases in popularity, or rental yields and growth rates start to decline in a once high-achieving city, their income streams and overall financial profile will remain stable.
Seek expert advice
The final advice for first-time investors, depending on which investment field you’ve decided on, the market is ever-changing, and so don’t be afraid to seek out advice if you’re unsure of where to go. There are a ton of online resources and guides out there, providing a constant stream of information, and you could even consult a forum or specialist if you want to ask a question directly.