If you have been looking to invest for a while now, then you must have come across lots of unfamiliar terms during your research. You must also have heard about how risky the stock market is, leaving you perplexed about where you should make your first move.
According to David Wilson, a New York financial planner with Watts Capital, you are not the first person to go through this, and most certainly won’t be the last. Wilson says that most potential investors tend to be paralyzed even before throwing their hats into the ring.
Financial Illiteracy
So, why is this so? The most obvious answer is financial illiteracy. The financial planner admits that the school system hardly touches on this topic, so an individual may be knowledgeable on lots of other things, but gets lost when it comes to money matters.
However, Wilson insists that not all hope is lost for beginners. What to do is to start with the basics, which to him is having a general plan, minimizing your expenses, diversification, and lastly, rebalancing.
And while you’re doing all of this, there’s one other thing that the financial expert wants you to do – ignore the market chatter and not get pulled into market timing. Think you can do that? According to Wilson, that’s the blueprint for any successful investor.
Successful investors around the world all agree on one thing, and it’s that there’s never the perfect time to invest, nor is there the perfect stock to buy. If you’re thinking about it, just do it, then make adjustments along the way.
Keeping Wilson’s basics in mind, you first have to choose which method you want to go with. Thankfully, the internet is everyone’s friends, and you’ll get all the information about your options online.
If searching for answers on your own leaves you more confused, there are platforms where beginners post questions they have, then experts take them through. One such platform is robo-advisor, and it comes Wilson-recommended.
The financial planner says that the platform allows you up to 10 questions, and from here, you can proceed to open your investing account. Sounds like an awesome deal, doesn’t it?
Customized Advice
But if you’re more inclined to a personal touch, you can visit an actual financial expert in their offices, and they’ll answer all queries you may have. The advantage of this is that they can give you customized advice according to your areas of interest.
When most people are looking to invest, the first thing that comes to mind is usually stock or bonds. So, what’s the difference between the two?
As Wilson explains, owning stock translates to owning a certain percentage in a company. Stock is also referred to as shares, and the name should be self-explanatory – you own a share of the company.
Bonds, on the other hand, are what the company owes you. Wilson likens it to an IOU, one where you can cash in at any time. At the same time, you are allowed to trade ownership of the bond, but note that its value fluctuates given the changes in the set interest rate.