The basics of what to do when looking for investment opportunities
Getting your head around how investments work can be overwhelming. Not only that, but it can be difficult to know how to invest your money in the right stock. Here are the basics of what to know about investing.
What investing is and how to do it
Investing is where you take your money and put it into the market, usually into a business, to buy stocks and trade them further down the line. The aim is to make more money than you originally put in.
It is often compared to a savings account, where you put money into them in order to build up interest. The difference is that a savings account guarantees your money will be returned, usually with a tiny percentage increase. Whereas an investment is a gamble, where you could end up losing quite a bit of money.
There are plenty of avenues of investments to consider, the most common of which being property which most people will invest in at some point. Aside from property, you can invest in shares or buy stocks from the stock market.
Stocks will be from the company via a neutral market, where you can buy or sell depending on the current price. The aim is to buy low and sell high, and you’ll be able to constantly track your investment to find the right time to do both of these things.
Essentially, if you buy a share, then you own a tiny part of that company, and will be known as a shareholder.
Is investing right for you?
If you’ve got this far into an article, then you probably have gained some interest within the investment market. But an interest doesn’t always mean you should go ahead with it. Ask yourself why you’re looking for investment opportunities.
You can use investing as a way of saving, as the money you put aside will sit there until you choose to take it out, and can either gain you money or lose you money, but it’s always a risk.
It may be that you are quite attached to a business, and what they stand for, and want to support them. You should be wary of investing into projects such as this, as chasing down investments that are led by your emotions could end up costing you.
You should always remove your emotion from investment opportunities, and focus on the data and growth instead.
If in doubt if investment is for you, then you should consider an entrepreneurship course, where you can learn more about venture finance, to help you make informed decisions when it comes to capital funding and investment in general.
Make an investment plan
It never hurts to plan ahead, not just in terms of investing, but in your life too. If you’re planning to get married in the next year, then it’s probably not worth your time or money to start investing.
You should only really start investing when you have money that you can afford to lose. So that you’re covered if your investment crashes. An investment plan can help you identify your goals, and assess how much risk you can take.
Not only that, but an effective investment plan could help you narrow down the industry to invest in, and go even further to find an actual product or business to invest in. There will always be a trending investment that everyone jumps on, but be wary of jumping on them too late, as the price could not be worth it, and end up costing you.
Consider using your plan to add lower investments to begin with, to see how you get on, before slowly increasing the opportunities when you are confident to. You should diversify your investment portfolio, in order to increase your chance of success. Consider utilising different industries and sectors in order to minimise risk if one area of business was to tank.
How long you could own stock for
A common misconception when it comes to stocks, is that they usually have a short turnaround. In fact, you could end up holding them for up to 25 years. It’s quite easy to forget about investments, unless you use an app or tool that keeps them all in one place.
You should be prepared for owning stocks for a long time, in order to get a payoff. Consider using an investment business to look after your accounts on your behalf. They are specialised in understanding the market, and put their clients first to try and find them a profit.
There are different types of stocks you can invest in. With some allowing you to invest and pull out within hours, and some that have a minimum set time of investment. It’s possible that some businesses will end up buying back its stock, as a part of their corporate growth so you should keep an eye out.
