Thinking of investing and don’t really know how? Learn some easy steps to help you get started.
You’ve decided to start investing, but you don’t know when to take the plunge. Should you invest now? Or wait until prices fall a little? But what if prices keep going up? Will you have missed an opportunity?
Don’t let fear hold you back. These three simple tips can help you start putting your money to work.
Create a plan and a timeline
Create a plan—think about what you are investing for and when you will need the money. Having a plan can keep you focused on your long-term goals rather than short-term market movements.
Invest your dollars across a number of different types of investments. This strategy may help to reduce the risk that your progress will be derailed by poor performance of a single investment or single type of investment.
Regularly schedule contributions into your investment account
Consider investing a set amount of money weekly, monthly, or quarterly, no matter what’s going on in the markets. This approach is known as “dollar cost averaging” and it can help to average out the prices at which you buy investments over time.
The key to success is to keep in mind why you’re investing and when you plan to use the money rather than be distracted by day-to-day changes in the market.
Dollar-cost averaging does not guarantee profit or protect against loss in declining markets. Since such a strategy involves continuous investment, the investor should consider his or her ability to continue purchases through periods of low price levels.
There is always the potential for loss as well as gain. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses.