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Investment 101: How Should I Start Investing?

Key Points

  1. Investment is an asset or item that’s acquired with the goal of generating income and appreciation.
  2. Understanding your needs and budget before investing.
  3. Research is important for investment to avoid unnecessary troubles.

With the recent stock market fluctuation, younger investors might find themselves getting into stocks more financially risky than they are used to. However, the experts say that now is a good time for people who want to invest their money. They recommend starting investing or adding more funds into stocks if you haven’t already started doing so, and it will be worth your while in the long run!

Investing is an important and complicated topic that everyone should understand, but no one can give you the perfect answer on what to do. While there is no one-size-fits all answer for investing, if you’re looking to get started with your money, there are many things that need consideration such as budget limitations and investment style preferences. Understanding what you need will help build one suitable investment portfolio for you.

As a newbie to the world of investment, there are many questions you’ll want to ask before getting started such as, ‘How do I get started and what kind of investments are suitable for me’. No worries because we’re here with everything newbie-friendly that’ll set your mind at ease!

What is Investment?

Before we start, let’s understand what investment is? Investment is an asset or item that’s acquired with the goal of generating income and appreciation. Investing in tangible assets is a great way to build your net worth. You can buy stocks, bonds and other types of investments that will grow over time thanks to their resale value as well!

How Does Investment Work?

Investing is all about making smart decisions and seeing your investments grow. When you buy an asset at a low price, sell it for more than what was bought (a capital gain), this means that you made money by buying low and selling it at a higher price.

When an investment gains in value between when you buy it and sell, this is known as appreciation. This includes the purchase of bonds, stocks, gold, or real estate property. Nowadays, people start investing in cryptocurrency and non-fungible tokens (NFT) too. We will talk more about it later.

When Should I Start investing?

Investing early is one of the best ways to see solid returns on your money. That’s because of compounding earnings, which means investment returns will start earning their own interest and eventually turn into more money!

No matter which types of investment you are into, there will be fluctuation. Investing at a young age means you have a long time to ride out the ups and downs. Therefore, even investing in small amounts can grow over decades!

What Should I Consider When Investing?

Individual Preferred Style

Before you understand about investment, you should understand your needs. Different people should have different investment styles. Whether you’re looking for a quick buck or want to build wealth, there are two major styles of investing that will suit your needs: active and passive investing.

Active investing

  • Do the investing yourself
  • Tons of researches need to be done
  • Potential huge or life changing returns
  • Short term investment

Passive investing

  • Do not need to involve directly
  • Less capital gains tax
  • Moderate returns
  • Long term investments

Active and passive investors both have their benefits but it’s important not just focus on short term gains if possible because the long-term performance can be better with some risks involved too!

Budgets

If you’re looking for ways to invest your money without taking too much risk, you should consider building a portfolio with a lower budget. What’s most important about starting your investing journey is that you are financially ready for it and have the money set aside regularly.

Setting up an emergency fund is essential before investing. This will not only allow you to withdraw funds quickly if you meet any emergency issue, it will also protect your investments from losing value due the risk involved with all types of investment such as stocks or real estate transactions that can be timely yet risky at times too! High-interest debt is not worth the hassle. You should get rid of it before you start investing!

Risk Tolerance

The level of risk you are comfortable with will be different for each person. There is no one-size fits all when it comes to investing your money, so make sure that any investments fit within the parameters set by yourself and those close around you before taking on more than what can handle comfortably!

Robo-advisors are the perfect solution for beginners with little or no experience investing (such as StashAway). Financial services are offered by brokers to construct portfolios that meet your risk tolerance, goals for returns potential while keeping everything within an appropriate range.

Types Of Investment In Malaysia

There are a few types of investment in Malaysia that you should know before investing.

The Bottomline

Whether you’ve never invested before or are a seasoned pro, you should remember to figure out how much money should be invested in order to protect it from risk of loss. Reserve the emergency fund, so you will not lose anything if your investment fails.

Moreover, remember to consider during an investment journey which involves determining your own tolerance levels. Last but not least, be extra careful when investing your money. Research the company thoroughly and don’t be afraid to ask for help if you need it!

Remember, investing is no gamble, therefore prepare yourself before investing.

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