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How to Invest Money: Smart Ways to Get Started (2024)

By Will Ellis
Last Updated on February 29, 2024
Edited by Adam Turner
Fact checked and reviewed

Do you want to start investing for the first time, or are you a savvy investor looking for new avenues? 🏎️💨

Whether you’re just starting out or a seasoned investor, whether you’re an older person with a lower risk threshold or a young person with maximum risk tolerance, this guide will walk you through the essentials. You should never expect a return on your investment. The value of your assets might go down as well as up, thus investing is not without risk.

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Money sitting in a savings account earning interest is quite different to money invested. Rather than having your money sitting safely in a savings account with assured returns, you are taking a chance by investing it. The ideal outcome is to get back a lot more money than you put in (a fat profit), but it’s also possible to come out with a loss (a nasty loss). Be savvy but remember:

Fortune favours the bold 💥.

Table of Contents:

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Learn how you can grow 🌴☑️.

Smart Invest Lesson 1 📕 – What You Can Invest In

Assets commonly invested in.  💵

Almost everything is open to investment, from the most popular mainstream objectives… 

  • Shares
  • Bonds
  • Funds
  • Bonds issued by the government 
  • Real estate market

(are you already snoozing from boredom? 😴)…to things that are a little more out-of-the-ordinary, such…

  • 🐄 Farmland
  • 🚗 Classic automobiles
  • 🍷 Wine
  • ➕ Startup technology companies
  • 🎨 Quality artwork

Smart Invest Lesson 2 📙 – Understanding Stocks 

Are stocks really worth it?

Most people think of investing as investing in the stock market. Investing in these markets means doing what it says on the tin: purchasing stock in one or more firms with the hope of a gain.

Investing is a risk since there is no assurance that you will receive all of your cash back. There are a variety of methods to accomplish this (such as via funds, which I’ll talk about later). It’s possible, albeit unlikely, that you could lose everything.

Since it bears repeating, this is a very important message: A stock market investment has the potential for both little and large gains, as well as large losses that leave you with nothing.

The stock market may conjure up pictures of young traders shrieking “Buy! Sell!” with their heads in their hands one minute and pumping their fists the next, but long-term investment is usually much more pedestrian: you choose a few stocks or funds, monitor them, and pay out when you need the money.

Thankfully, this isn’t the kind of sexy, glamorous, high-adrenaline action seen in Hollywood movies, where millions of dollars may be earned or lost in a matter of minutes.

In order to earn respectable Return On Investment that can weather inflation and ride through extraordinary surges, most people need to have a rational attitude towards the stock market.

Smart Invest Lesson 3 📗 – Buying & Selling

Everything is an exchange. 💵

A stock exchange functions similarly to a grocery store, where shares may be purchased and sold. For the sake of this tutorial, and to keep things as simple as possible, a stock market is just a venue where buyers and sellers gather to trade shares.

When did shares become a thing? When businesses started offering investors the opportunity to buy a portion of the business, so the business could use that money to expand and, with any luck, increase earnings and become financially successful.

You may become a “shareholder” in a firm by investing money in its stock market and receiving a “share” in the company’s future. Your ownership stake in the business may be sold to anybody else for whatever price you choose.

Smart Invest Lesson 4 📕 – Why Things Go Up & Down

Basics of supply & demand.  💵

The ups and downs in a stock price usually have some kind of explanation.

The original price is defined by the company selling the shares, but the price on any given day may be affected by factors such as the company’s financial performance, the state of the economy, and so-called “sentiment”, or the belief among purchasers that the company’s outlook is good or bad. Moreover, if a company’s growth rate doubles in a year and its future seems bright, its share price is likely to increase.

Shares worth billions of pounds are traded daily on the London Stock Exchange in the United Kingdom. You may invest in one of the about 3,100 available businesses. The FTSE 100 is the most widely followed stock market index in the United Kingdom, for instance. Meanwhile, Australia has the Australian Securities Exchange (ASX).

Smart Invest Lesson 5 📘 – Nothing Guarantees Success 

You may earn a lot of money, or lose it all.  💵

When you put money into the market, what type of return can you anticipate? Those who are considering putting money into the stock market often want to know this, since they base their investment decisions on the possibility for growth. 

I’ll be honest with you: I have no idea what you’ll get (and if anybody claims to know for sure, they’re lying). Nonetheless, I can show you the possibilities.

Even while savings account rates have been on the rise as of late, inflation is still significantly outpacing them. The motivation to go elsewhere for profitable opportunities is understandably high.

Aiming for 5 per cent 🎯

Making a 5% profit on the cash you invest is the goal for most people, but it’s only achievable if you’re willing to accept a certain amount of risk. I’ve already mentioned this, but there’s no harm in saying it again and again…

Caution: the value of your money might go down if you invest it. To put it frankly, you risk losing everything. It’s not for nothing that you’ll find phrases like “Previous performance is no sign of future success”; you can never be sure whether or not your investment will be profitable.

Let’s look at the Standard & Poor’s 500 (S&P 500), an index fund comprised of 500 significant American corporations, to illustrate market volatility. With an annualised return of 10.7 per cent since its inception in 1957, it is one of the most sought-after investment vehicles in the world.

Yet, this is by no means a guaranteed rate of return every year. The yearly return of the S&P 500 index spiked to 31.5% in 2019, although such big increases are not the norm. Low points have occurred in other years, too, such as during 2008’s financial crisis. The S&P 500 index lost 43% in the year leading up to Q1 2009.

This supports our case for long-term investment and our other guidelines for success…

Smart Invest Lesson 6 📕 – The 5 Tenets Of Smart Investing 😇

Never forget these five investment tenets.  💵

  1. In general, the higher the potential reward, the higher the associated risk.
  2. Don’t risk everything on a single venture. If you want to reduce your risk, diversifying your investments across firms, sectors, and geographies is a good idea.
  3. You should avoid investing and put your money in the bank if you can’t afford to lose it. It’s best to play it safe with your savings if you’re planning on using them in the near future. There should be a minimum investment time frame of five years.
  4. Think on the things you have accomplished thus far. It’s possible that a share is a dud, or that you’re just not willing to take as many chances as you were previously. It’s possible to have a losing share account if you don’t check in on it often.
  5. There’s no need to freak out. It is possible for investment values to decrease as well as increase. Have a clear strategy and don’t get emotional – don’t sell or purchase stocks (10 “Best” Investment Apps) just because everyone else is doing it.

Smart Invest Lesson 7 📙 – You Are Responsible

You’re behind the wheel. 💵

If you’re thinking about investing, remember that only you can make that call. 

Ask yourself WHY you want to invest before making your first stock market purchase or selecting a stock market fund. The historical performance of stocks and shares has consistently surpassed that of savings accounts over lengthy time periods.

Yet, this is by no means a guarantee that they will continue doing so in the future. It depends on the specifics of your situation. You could end up among those who have grown weary of the pitiful interest rates offered by traditional savings accounts and are now willing to take a chance in the hope of earning higher returns.

Or maybe you’ve done the math and figured out that you need to put away $10k in the next 10 years to help pay for your kids’ college tuition. Both of these scenarios are excellent opportunities to put money to work. 

If someone gives you advice, tread carefully… 

If someone you know from the bar offers you a stock tip or suggests you “plug a few dollars” into a hot share or fund that is now “shooting the lights out”, you should usually think twice unless you have a lot of extra cash you can afford to lose.

Think critically about your financial situation… 

It’s time to take a step back and reevaluate your financial situation if you’re having trouble making ends meet because of high interest credit card debt or a high cost mortgage. If so, your funds might be better used to pay down these debts, on which you’re likely paying higher interest rate than you might make by investing your funds elsewhere.

This may seem like simple bookkeeping, but many individuals let the promise of fast money in the stock market blind them to the reality of their financial predicament.

If this sounds like you, it’s in your best interest to look into debt relief options before things become much worse; for guidance, look to people like Dave Ramsey

Smart Invest Lesson 8 – Budgeting

Know what you can afford to lose. 💵

The common misconception that only wealthy individuals may participate in the stock market is false; many lower-scale investors that “drip-feed” in small amounts of money on a regular basis can perform in a far superior way to those who dump large amounts into the marketplace.

Rule of thumb: Don’t put in more money than you can afford to lose. Why? There’s no use in having too much of your wealth in stocks, you risk losing a significant amount of that wealth if the stock market crashes. Financial experts recommend making a long-term investment of at least five years. This way, there is time to weather any market storms that may cause you to lose money.

Keep in mind, as I said up above, that stock market gambling may not be a good idea if you are low on money and saddled with a lot of debt. Although low savings rates are frustrating, investing a portion of your savings (that you don’t need for day-to-day costs) in the stock market may be a good strategy to attempt to increase your returns.

Little, modest monthly contributions, such as $25 a month, are accepted by many fund managers and add up over time to a sizeable amount.

Investing in stocks online, via a website or “platform”, is the most cost-effective option.

While there isn’t one single best place to buy shares or funds, many investors have found that using a website, or “platform”, to compare prices and make purchases is the most cost-effective option.

Smart Invest Lesson 9 📓 – Starting

Getting going… 💵

Choosing the exchange where you will invest your money is the first step in making your investment decisions.

Your first decision is where you will buy the bread (which platform you will use), and then your second decision will be what kind of bread you will purchase (your shares or funds). Fees for both accessing the site and purchasing the investment are standard practise. Now, let’s extend this example a little bit and pretend that every bakery has a different pricing for its paper bags.

It’s possible that the bakeries with the most costly bags are also the ones selling the cheapest bread. So, these aspects must be considered together in order to understand your true costs and maximise your return on investment.

Remember that the firm purchasing the shares for you or operating the funds will charge a service fee, in addition to the platform cost charged by the platform you chose.

Smart Invest Lesson 10 📓 – Final Smart Lesson

Using mutual funds… 💵

Countries, gold, energy, oil, and even debt may all be invested in by financial institutions.

A fund’s focus might be on a certain region (Japan, Europe, developing markets), kind of company (green, utilities, industrial), investment vehicle (corporate bonds, shares, gilts), or industry sector. Your decision will depend on how you feel about taking chances.

If the fund is targeting “developing market biotech startups”, for example, there is a great deal of unpredictability in every facet of the investment. This means that you stand to win a lot if things go well, but lose a lot if they don’t.

Takeaway Time! 📚 🤠

Learn as much as you can!

There are a plethora of free websites loaded with in-depth fund and stock market information if you are unsure of what sort of investment to make or worried that you could be taking on too much risk.

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