These first-time investor tips are perfect for you if you’re ready to begin investing but not sure where to start?
The world of investing can feel incredibly overwhelming to a new investor but investing is not as complicated as some would have you think.
Let’s discuss three must-have tips that will help you overcome the fear that often surrounds investing and plagues new investors.
If you’re excited about the prospect of building wealth but feeling a bit hesitant to jump head-first into the world of investing you should know that I’m not an investing expert by any stretch of the imagination.
BUT but I have followed three rules when it comes to investing that helped me go from feeling completely confused to setting up a new retirement account, rolling over my Roth IRA to the new account, purchasing my first index funds, and setting up automatic monthly contributions to my Roth IRA with confidence.
If you’re looking for hot stock tips or my thoughts on cryptocurrency, this probably isn’t the place for you but if you’re simply looking for some first-time investor tips, decide which investment vehicles are right for you and be able to create a simple plan to invest for your future these tips will absolutely help you get started!
If you are new to investing you may be feeling as if it’s all so confusing and complicated and that you must have majored in finances to be able to understand.
You’re not alone – it’s very common for people to feel as though they need to learn a whole new language and skillset to begin investing for retirement.
It’s likely you’re trying to sift through a large amount of information trying to determine what is accurate, what’s not, who can be trusted, and who cannot,
Perhaps you’re even worried about the possibility of falling victim to some investing scam and losing all your money.
All are natural concerns for beginner investors – I had many of the same years ago – but there is something you need to understand…
Investing does NOT have to be complicated.
As with most things in life you can choose to overcomplicate things or you can choose to take a simple approach and investing is no different.
It’s also probably worth mentioning that specific people and companies often intentionally overcomplicate investing because it benefits them to do so, financially speaking.
Many financial professionals get paid very well to invest and manage their client’s money.
Many people hire these professionals when they feel confused or overwhelmed and want to seek the expertise and guidance of a licensed advisor, manager, etc.
In addition to first-time investors simply needing help, there are other reasons people hire financial professionals as well but it can come at a hefty fee of sometimes up to 2%.
Sure, it may not sound like a lot but when you compound that over time and take a look at how much interest you would potentially lose it may change your perspective on how much a seemingly inconsequential 2% actually costs you.
The decision of whether or not to hire a financial professional isn’t necessarily a bad one, but it’s important that you’re making an informed decision.
Be sure you’re aware of how much you will actually be paying for their services and determine whether it’s worth it to you before hiring someone out of desperation.
While financial professionals offer many other services aside from investing advice and management, if you’re looking to hire someone solely to handle your investments, believe it or not, you CAN figure this whole “investing thing” out on your own – should you have the desire to.
3 Important First Time Investor Tips to Beat the Overwhelm
I knew absolutely nothing about investing when I got started but I really wanted to so I instituted a few specific rules and it changed everything for me – and it can do the same for you!
1. Don’t Invest in Anything You Don’t Understand
First, don’t invest your money in anything that you don’t understand.
No, it’s not necessary that you know all the ins and outs of anything you’re thinking about investing in but you want to ensure you have at least a fundamental understanding of potential investments in order to understand the risk and how volatile an investment may or may not be.
It’s common for people to have FOMO and want to invest in the latest investing trend you’re seeing all over the internet and social media (yep, I’m looking at you AMC, GameStop, Etherium, etc. 😳).
You may feel pressure to join in when your friends tell you about a surefire bet and how it will make you super-rich overnight but it’s a bad decision to invest any of your hard-earned money into something that you know absolutely nothing about.
Remember, just because it feels as though everyone around you is doing it and making money does not mean you will have a similar experience.
2. Be Your Own Advocate
Next, do your own research.
You must be your own advocate, especially when it comes to investing.
Unfortunately, there is no shortage of people looking to take advantage of others, and if you have zero knowledge of investing you could be putting yourself at greater risk of falling victim to investment scams.
Taking in all the first-time investor tips can help you become informed and understanding what you’re going to do with your money is crucial.
A good place to start is to do an investing brain dump…
Grab a sheet of paper or open a new note on your phone and jot down all of the questions you have regarding investing: terminology, required steps, and any concepts that may be unclear to you.
Next, head to Google (watching YouTube videos and listening to podcasts are also great ways to educate yourself)…
We are fortunate to have unlimited information at our disposal so take advantage of all the free information out there and do your own research!
Be discerning when taking specific investing advice from random people on the internet.
The entire reason for you doing your own research is to put you in control of your financial choices allowing you to make educated, informed decisions instead of simply blindly taking stock tips from your favorite TikTok creator.
Don’t allow yourself to be so inundated with digital media sources that you forget about good old-fashioned books!
Is there a particular type of investment you’ve always wanted to learn about?
I can pretty much guarantee there’s been a book (or 10) written about it!
One of the best investing books I’ve ever read is called The Simple Path to Wealth, which focuses mostly on index funds.
After reading this book and doing other research, it has become my personal opinion that investing in index funds is the best place for a beginner to start.
It’s a good read and got me hooked on wanting to ditch the current mutual funds in my Roth IRA and purchase index funds instead.
One of my favorite ways to learn about a particular topic is to find and enroll in an online course created specifically around my topic of interest.
Yes, you’ll be spending money to do so but I’ve almost always found them to be worth the money because having all of the information curated and collected in one specific place saves a TON of time surfing the web and combing multiple sites, articles, and authors.
Again, it should be noted to also practice discernment when seeking out online courses to be sure they are worth your time and money and are offering you solid, accurate information.
I love this online course called How to Build Wealth by Investing in Index Funds.
It was created by a guy Jeremy Schneider who became a self-made millionaire at the age of 35.
I met Jeremy on Instagram a few years back (virtually, of course) and have learned so much from him over the years.
I decided to take his course because I fully trusted his knowledge of investing and his teaching style really resonated with me.
I’ve always been drawn to his content as he has an interesting way of being able to break down complicated topics into their simplest forms.
He does this by creating simple, emoji-filled illustrations that are especially helpful if you’re a visual person.
I knew I was ready to get more serious about expanding my knowledge of index funds – and investing overall – and I figured Jeremy’s course on investing was a great resource to help me on both counts.
How to Build Wealth by Investing in Index Funds turned out to be a great investment and is jam-packed with incredibly helpful first-time investor tips.
» READ MORE: Personal Finance Club Review – My Honest Opinion
And while the main focus is index funds, it covers many other important investing topics such as how compound interest works, how to read ticker symbols, how the stock market works, and more (see image below).
Plus, he gives away 20% of every course he sells to charity and it’s hard not to get behind that business practice!
Ready to learn more?
3. Just Get Started
Lastly, as cliché as this may sound…just get started.
Every single day you put off investing you are literally leaving money on the table you could potentially be earning in compound interest.
There is such a low barrier to entry these days with learning about investing and actually getting started.
You can begin with just a few dollars a month and little to no fees.
Even the smallest amount can compound over time.
Try starting with just five or ten bucks a month and automate it, if possible, so you don’t spend it elsewhere.
Is it going to make you a millionaire next week?
Of course not, but it’s getting your feet wet.
And more importantly, it’s getting yourself in the habit of setting aside specific money to invest in your future to build wealth over time.
For most of us, we don’t have anyone who is planning to take care of us, financially, in our retirement.
It’s imperative you begin planning NOW to take care of your future self so you can be at peace with your finances when you retire.
So you can live comfortably and enjoy what you spent your entire life working to build with no money stress or overwhelm in your life.
Investing for retirement is truly a marathon, not a sprint.
It is something that we need to start as early working towards as early as possible.
If you start now implementing these first-time investor tips and dedicating time and energy to plan for your future, you can absolutely enjoy a life you love.
Kristin Stones is the owner of Cents + Purpose, an online community dedicated to sharing practical personal finance content. Her mission is to equip women with the necessary tools and knowledge to take back control of their money and live a more purposeful life. She creates actionable content to help her audience achieve financial wellness using her simple approach to managing money - all learned through her personal experience of paying off almost $55,000 of debt in under two years.