Though it may seem hardly doable to become a millionaire for beginning investors, it is possible with a combination of time, patience and smart financial decisions. Here is some simple and relatively safe investment advice for beginners with ways to potentially accumulate wealth through investing that can make long-term wealth building reality.
10 Surefire Investment Advice Strategies Beginner Investors Need to Know
Investors like Warren Buffet talk about starting to invest as early as possible. The reason is the power of compounding returns. Your investments will grow and the returns will keep flowing into your investments and over time you will see returns magnified as they build upon those returns.
You also should consistently contribute to those investments for long-term wealth building. Setting up automatic deductions to your investment account keeps you consistent and this discipline will pay off in a big way. Remember even small amounts of money can grow a lot over time.
Diversification in investing is important. Stay diversified to spread risk over different asset classes to reduce the impact in poor performance of single investments. You diversify across stocks, bonds, real estate, and other asset classes based on your risk tolerance and financial goals. And this will change as you age since your level of risk tolerance will shift as you get closer to retirement.
Warren Buffet loved straight low-cost index funds because the management costs are less, which is essential investment advice for all, but especially beginners. They also have ETFs or exchange traded funds and buying into ones focusing on an index like the S & P 500 will spread risks.
I wouldn’t take zero risks either. Try looking at reports like Morningstar or your investment company or broker that also has these tools available for rating funds with a star system. Four and five star large corporate growth and income funds will get you more growth while putting you into the biggest and hopefully strongest companies. I had one adviser tell me that when the seas are rough being in the largest more stable ship will be the safest. Therefore, you may want to consider larger growth oriented companies for that purpose in regard to lowering risk. This is what I like about funds like that they will grow much more and the star ratings will give you a good picture of potential risk.
Always take advantage of free money from your retirement account benefits too. Your employer may offer a matching contribution to the 4010k that they provide. Also, there are standard IRAs giving you a tax break for the contribution or Roth IRAs that shield the investment returns from taxes. The Roth IRAs just don’t let you deduct the contribution but have no minimum distributions you need to worry about when you’re older. These accounts offer tax benefits that can help your investments grow faster over time.
Never try to time the market and in the end you will just short change yourself. You may sit out a time of growth or buy at a peak. Just keep contributing and not panicking will keep you on track. Keep focused on a long-term investment strategy and stay in the market through market swings for long-term wealth building.
Another of these financial growth tips about investment for beginners is this advice of self educating on investing, trends in the market and financial planning to avoid pitfalls and help making informed decisions.
Look at your costs as well. You want to minimize investment costs such as management fees, commissions, and taxes. Those high fees will chip away at the returns you earn. That’s one of the advantages of the index fund in that they have lower fees.
By reinvesting dividends and returns you can accelerate wealth growth because of compounding.
Many funds offer this as an easy option to simplify it for investors.
If you keep disciplined and taking a patient view of the market will keep you from jumping in and out of the market. Avoid making impulsive investment decisions and stay focused on the long term.
At some point you may need to seek a professional. If you’re unsure about investments choices, they look for a qualified financial adviser who can help you tailor your investments to meet your financial goals.
In the end remember investing will entail risk. You can’t avoid it and you have to assess your risk tolerance, financial situation and your investment objectives before you invest. You want to be able to sleep at night because of smart investment decisions. But do look at the long term growth and find the investments that will match your goals and let you sleep soundly knowing you are safely investing.
Remember, building wealth through investing is a journey. Stay informed, stay committed, and let time work its magic. Your millionaire potential awaits!
