A Beginner’s Guide to Learning How to Invest | Personal Finance Views

Tuesday, January 27, 2015

A Beginner’s Guide to Learning How to Invest

Investing, when you first start out, can be overwhelming as there is a steep learning curve. However, if you persist, the difficult task of learning new terms and what they mean will become progressively easier.

The less you know about finance and how financial markets like the Stock Markets, Forex, or Futures work, the more difficult the task of learning how to invest.

If you are a newcomer to the world of investments, the art of making your money grow through strategic financial planning, learning how to invest can be very challenging.

As a beginner you will be frustrated looking for answers on how to start to invest, how to find good opportunities, how to identify the best strategies to use, and how to handle your investment when you experience unexpected volatility in the marketplace.

Learning How to Invest

One way to overcome this initial frustration is to follow guidelines that will help you develop the right mindset as well as guidelines that will help you to become a competent researcher. Through study and practice, you will eventually become a skillful investor.

General Guidelines about Developing the Right Mindset

1. Identify your goals and list your personal and financial needs. The more precise and concise your goals, the more likely you are to head in the right direction and stay on course.

2. Learn to avoid impulsive decision-making.

3. Don’t be afraid to make mistakes and choose to learn from your mistakes, seeing them as course corrections, rather than a reason to quit. Many things are more obvious in hindsight than when you are first exposed to the facts.

4. Choose to persevere through the learning curve, recognizing that what baffles you today will become understandable tomorrow.

General Guidelines about How to Study Investments

Here are some general guidelines, rules of thumb, to follow when learning the art of making investments:

1. Research everything thoroughly. Don’t simply jump into an investment; research it comprehensively first. What may seem like an obviously good deal may turn out to have many hidden factors that will lead to financial loss.

2. Research will increase your knowledge about the investment, as well as inform you about the benefits and liabilities associated with it.

3. Research will expand your view of how to invest your money, and, at times, may lead you to take a new approach in how to invest. In other words, the more you know, the more options you will begin to see.

4. Research using reference materials to educate you. Reference materials can include articles in magazines and journals, books, and multi-media information products.

5. Research should include asking an expert about his or her opinion. Before asking for advice, read all you can about the subject. This way, you have more mental references to connect the dots when the expert explains something to you. Occasionally, too, you may find that the expert is either far off track with current investment literature or may, in fact, not be an expert at all. On the other hand, the expert may be able to shed new light on something you have studied, allowing you to see it in a broader and more useful way.

6. Research should be accompanied by extensive note-taking. When you read, take notes. When you talk to someone, take notes. An old Chinese saying talks about how the palest ink is better than the finest memory.

7. Research should be based on your identified goals. By setting your goals before researching, you stay on track and will not get distracted by information that will not serve you.

When you follow these guidelines on mindset and study habits, you will master the art of investing wisely to begin earning the income you desire.

No comments: