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3 Tips For New Investors

If you’re new to investing, you know just how tempting it can be to jump right in and start impulsively buying stock without much forethought or research. And while this enthusiasm can work to your advantage at times, it’s important to know what you’re getting into, and well, how exactly you want to get into it before you do.

With that in mind, here are 3 tips to help you venture into the world of investing.

  1. Make an Investment Plan

Like most other worthwhile endeavors, investing should begin with a game plan. You wouldn’t start saving for a down payment or your child’s college tuition without a game plan, so why would you venture into investing without one?

Ok, so now you know you need a plan, but what exactly does that mean when it comes to investing? Well, you should start by identifying your end-goals. In other words, how much do you want to make and in what time frame? Once you’ve answered these questions, you can create realistic, monthly sub-goals to get you there. As Alexander Koury of Values Quest puts it, “if your goal is to save $100,000 in 10 years, start with the end in mind and figure out how much you will need to invest monthly to reach your goal”.

2. Asses Your Relationship With Each Investment

Each time you invest in new stock it’s crucial to assess your relationship at the door. What initially drew you to this stock? What factors played into your decision to invest? Or, as Dayana Yochim of Nerd Wallet puts it, you should ask yourself: “What makes every stock in (MY) portfolio worthy of a commitment… and what are the circumstances that would justify a breakup?” If you answer these questions early on, it will be much easier to make level-headed decisions about your stock, and whether to keep or sell, down the road.

3. Buy Stocks Over Products

If you’re on a tight budget, you might be wondering how people find extra money for investing to begin with. There are some pretty creative ways to acquire money to invest, but one of the best is opting to buy stock over product when it makes sense to do so.

Take Apple as an example of just how great this method’s payout can be. Back in 2007, when the first iPod touch was released, it was sold for $299-- which, all things considered, doesn’t seem like much. But If everyone who purchased this product back in 2007 had instead chosen to invest that money in Apple stock, they would have racked up a whopping $1310 worth of stock within 6 years.

So, the next time you’re tempted to upgrade to the newest iPhone or MacBook, why not invest that money in Apple stock instead? It’s sure to benefit you in the long run.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.