Starting your investment journey can be scary and exciting. The jargon, graphs, and resources (both good and bad) make it all look complicated. But the good news is that everybody can build their wealth from scratch, even if you’re a complete novice! With a little effort, the right attitude, tools, and information, you can achieve financial independence. If you’re wondering how to start investing, then here are some basic things that you need to know.

Why Should You Invest?

While it is wise to save, any interest on your savings just languishes in a bank account. If the rate of inflation is greater than the interest that you are receiving, it will impact the value of your money. The goal of investing is to let your money work hard for you. If you’re successful at investing over the long term, you’ll be able to accomplish the financial goals you set out for yourself, like buying a house, paying for an education, or retiring comfortably. The earlier you start, the better, as your investment will have more time to grow and accumulate interest.

Set Your Goals

Every successful investment strategy is based on a clear end goal. Ask yourself:

• Are you saving for retirement?
• Are you planning to build up wealth for a major purchase, such as a house?
• Are you looking for short-term growth or long-term stability?

By answering these questions, you can set realistic goals and make informed investment choices, maintaining a balance between risk and reward in your portfolio.

Understand Risk and Time Period of Investment

Investment always has different levels of risk. Young investors often have longer time horizons and are willing to accept more risk because the growth potential is more within reach over time. Older investors nearing retirement may wish to limit their risk within a spending horizon, preferring a safe investment that can protect their wealth rather than grow it quickly. Finding your comfort zone on the risk horizon and aligning it with your investment time frame is crucial when creating a long-term portfolio strategy that you can invest in.

Take it Slow and Be Consistent

You don’t need thousands of dollars to start investing. Many platforms allow you to invest in smaller amounts, and some even support fractional share investing. You’re much better off investing even small amounts rather than saving or investing in lump-sum quantities once a year. Small sums collected over time can yield significant outcomes due to compounding.

Diversify Your Portfolio

One of the cardinal rules of investing is not to keep all your eggs in one basket. By diversifying, you can avoid a single loss in your overall portfolio. Diversifying can minimize the damage if a single sector or industry is in distress. Diversifying your assets is also equally important. Don’t limit your exposure to just stocks; instead, you should build a portfolio of stocks, bonds, and ETFs (exchange-traded funds), etc.

Use Technology to Your Advantage

Technology has made investing far easier. Many platforms provide:

• Automated investment options
• Research and educational tools
• Mobile apps that make investing easy
• Transparent fees

They take away some of the complexity and allow just about anyone to make informed decisions!

Make a Commitment to Learning

The most confident investors are those who constantly learn and reflect. Take a moment to review market trends and financial news and consult beginner resources. Just a small amount of extra knowledge will help you identify some of the most common mistakes when learning how to invest, and make you feel more confident in your decisions. 

Think Long Term 

Markets fluctuate, and long-term investing requires patience and discipline. Rather than attempting to find trends in daily market movements, focus on your goals and the bigger picture. Avoid making emotional decisions, and remember that time in the market has often proven to be more profitable than trying to time the market. 

Building wealth takes time, but starting small and being consistent is what will make you successful. Learning how to start investing is only the beginning of a journey that will, with time, become increasingly fulfilling. With modern tools to help and platforms like SoFi, along with a long-term perspective, you can easily take charge of your finances and build a brighter, wealthier future.