Investing for Beginners
by: Dr. Boyce Watkins

 

 

How you should think about Investing

Investing is something you have been doing since the day you were born.  Every day, when you get up and go to work, when you spend time with your kids, when you put in energy to exercise, you are making an investment.

• What is a return?
  • A return on your investment is when you make the sacrifice today and get you get the benefits tomorrow. 
  • The benefits are not always financial.  They can be emotional or psychological as well.

So, the first thing you should learn about investing is that most of your greatest investments do not involve money!

Now About Financial Investing

The first step toward investing should be to get a cash reserve.  You need money on a rainy day see the page on budgeting and cash management for more details.

Next, pay down some of your high interest credit cards.  They say that a penny saved is a penny earned, and that has never been more true than when you are getting rid of high interest debt.

Note that stocks are not the only kind of investment you can make.  Everyone talks about the stock market like it’s some magical ATM machine, some place where people put money in and become instant millionaires.  It is not!

   o       The stock market is just one of many investments you can make with your money.

   o       It is a place where you should go into it with a long-term strategy. Short-term investing not only increases your stress, but you are more likely to lose money and pay higher taxes. 

   o       You should think of the stock market as a place where you slowly place bits and pieces of your cash, allowing them to grow through time.

Very important!

There is NO GUARANTEE that you are not going to lose money!  The stock market, and other investments is a place where your money can grow or it can shrink.  But if you follow some of these tips, you can keep your money from shrinking.

Key things to remember to keep from losing money:

o       Don’t put your eggs in one basket (diversify – which I will explain later)

o       Do not think short-term.

Continue to page 2.

 

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