Find out why you should invest early and how to get started.
Investing! It has become quite the buzzword lately. Some see it as a smart must-do wealth builder, some see it as educated betting, and others simply see it as a potentially prosperous thrill. Investing is the commitment of money with expectation of future rewards. Stories of fortune-filled wins and heartbreaking losses from investments have populated the media since the earliest days of the stock market.
Big names often come to mind when thinking about notable investors who have made their careers off of excellent market forecasting and portfolio management. Warren Buffet, once the richest man in the world, has an army of admirers who soak up his every insight due to his phenomenally successful investing track record. He was 11 years old when he purchased his first stock (from a petroleum company), proving that you can never start investing too young.
Starting your investing journey young can provide you with a great head start, leeway to learn, space to fail, and time to achieve consistent returns. Do not be misled into believing that investing is a sprint instead of a marathon. One must understand the importance of being financially independent and reach for the benefits that investing has to offer.
This blog discusses why investing early is a smart move and why you should not hesitate to take the starting leap as soon as possible.
Benefits to starting early:
Investing is a long-term game. Unlike The Wolf of Wall Street might have made some believe, the chances of hitting a jackpot stock in a matter of days are not realistic. Patience is integral in successful investments and the world of investing is very vast, so when starting early, you can afford to take the time to learn through experience while you play this long game and let your investments multiply.
Underneath the umbrella of investing, you can find stocks, mutual funds, ETFs, dividends, derivatives, and options, among many other things. Immerse yourself in knowledgeable resources and discover a strategy that works best for you to reap the most benefits. Profit off of the energy and motivation you have as a youthful investor and make the most from the extra time you have to fail and improve your investing skills.
Creating your portfolio
1. Establish Goals
There are many important questions someone should ask themselves as they build their portfolio. The first step to creating your portfolio is establishing goals for it. What are you striving for as you begin your investing journey? What does a successful portfolio look like to you? What are you hoping to learn?
2. Risk Tolerance
Secondly, you must identify your risk tolerance. Will you be able to observe drops in stock prices without panicking and wanting to sell right away? Do you prefer less volatile stocks or are you willing to take your chances on some more volatile ones? Only invest as much as you are willing to lose, as there are risks involved with every investment.
3. Time Horizon
Third, you must choose a preferred time horizon for your portfolio. Are you looking to make investments that last a day, month, year, or decade? Long-term investments are usually the safest option and require the least work, however much patience is required with them. Investments with a shorter time horizon require more maintenance and can be of higher risk, however they can also bring a high reward in less time.
4. Combinations & Companies
Next is determining what type of investments you’d like to start with. The world of investing can be very overwhelming – there are so many options! Investors are constrained by their budgets. Whatever amount you decide to begin investing with, consider adding a percentage of each new paycheck to it. Educate yourself on the different kinds of investments that can be made like stocks, ETFs, mutual funds, etc. and start researching different public companies that pique your interest and whose offerings also fall within the range of your budget. Depending on what interests you, we will be able to recommend a platform that is most suitable to hold those investments. Select a combination that works best for you and do not look for perfection, as it is not possible.
A strong portfolio is one that is diversified. Look to diversify the industries in which you will invest, and if you have the time to monitor them, also carry some investments with varying time horizons and risk levels. This way, your portfolio will be much better equipped to survive unsystematic market risk.
We can help you choose an investing strategy most suited to your style, investing preference, knowledge, time, etc. You could choose to invest on your own through Qtrade Direct Investing™. However, there is also a the robo advisor option where you can invest through Qtrade Guided Portfolios™. And of course, if you’re looking for a personalized approach a great option is booking a meeting with an advisor through Credential Asset Management Inc. who will provide you with personal advice. Or reach out to Digital Wealth Specialists through Credential Asset Management Inc who can provide you with advice on your own terms. You can’t go wrong with any of these options.
7. News & Portfolio Rebalancing
Finally, once you’ve brought your portfolio to life, continue monitoring the investments that you’ve selected and rebalance your portfolio depending on what you see as best. Select some news outlets such as Bloomberg, Yahoo Finance, and/or CNBC, and tune in at a frequency that suits you to hear what financial analysts have to say and recommend about the market. Although these are popular sources for information, make sure to consume any opinion-related piece of media through a critical lens. A helpful tip: download the Yahoo Finance app, subscribing to the stocks that you may have invested in, and turn on notifications. This way, you will be notified when any significant rise or drop has occurred in one of the investments you may be holding.
The earlier you start investing, the better off you will be! It’s integral that investors be patient, strive to continuously educate themselves, and learn from experience. All famous investors have missed out big through poor investments. Risk and reward are directly correlated in investing, so you have to expect to lose some to win some. By building a portfolio early, you give your wealth decades to multiply. There is power that comes with being young – take advantage of it. Trust us when we say that your older self will thank you, and all the best as you embark on the promisingly fruitful adventure of investing!
Not sure where to start? An investment specialist has the expertise to guide you and will make getting started easy. Call us at 1.833.816.2010.
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Online brokerage services are offered through Qtrade Direct Investing, a division of Credential Qtrade Securities Inc. Qtrade and Qtrade Direct Investing are trade names and/or trademarks of Aviso Wealth Inc. and its subsidiaries. Qtrade Guided Portfolios is a trade name of Credential Qtrade Securities Inc.