Saving Advice - You can’t get rich without investing unless you inherit money from a wealthy relative. If you didn’t grow up in a family that invested regularly, putting your money in the stock market can be intimidating. What if you lose your money? However, with these investment strategies, you can learn how to invest safely to secure your future.
The Ultimate Guide to Building a Solid Investment Portfolio
Take a Course (or Many) If you’re new to investing or want to improve your finesse, take an investing class (or two or three). Thankfully, there are many free investing courses. For instance, TD (TSX:TD) Ameritrade offers 22 YouTube videos that explain a variety of investment techniques, from “What’s an Index” to “Dividend Reinvestment Strategies” to “Understanding Future Margins.”
Invest Early and Often Thanks to the power of compound interest, the earlier you can invest, the better. Even if you can’t invest a lot initially, any amount you can will help you grow your wealth.
My son, a college student, has a part-time job that requires him to invest three percent of his pay in a retirement account, and the company invests seven percent for him. I’m so excited because this is a fabulous opportunity for a teenager. By only contributing three percent, he’s getting 10 percent of his pay set aside for his retirement! Between the employer contribution and the compounding interest, he’s in an excellent position to save for his future.
Make Long-Term Investments When you invest, plan to keep the money in the investment for years. You will likely lose if you play the game of timing the stock market. Instead, invest the money and only occasionally look at how your portfolio is doing. Remember, historically, the stock market grows, even if there are dips in the short term.
Utilize Dollar-Cost Averaging The premise behind dollar-cost averaging is that you invest a set amount every month. You are not trying to time the market. By investing the same amount every month, you sometimes buy when the price is high and sometimes when the price is low. Over time, you end up buying at an average purchase price. In addition, investing a set amount every month trains you to be a disciplined investor and grows your portfolio quicker than other strategies.
Diversify You can also protect your money by diversifying. Ideally, invest in index funds. Doing so minimizes your risk because you’re invested in multiple companies. If one company does poorly, you’re still protected because only a portion of your money is invested in that one company; you’re invested in many others, also.
Invest in Dividend Stocks Dividend stocks are an excellent way to grow your portfolio without investing additional money. Each time a dividend stock pays out dividends, take the money and reinvest it. You’ll be amazed at how quickly your money can grow using this strategy.
Final Thoughts
Learning how to invest can be intimidating. However, with these investment strategies, you’ll be on your way to a solid investment portfolio and a more prosperous future. The most crucial step is self-education; luckily, many free investment courses are available.