An Easy Guide to Investing for Beginners

FinanceTrading / Investing

  • Author Maxwell Hill
  • Published December 26, 2009
  • Word count 503

The best way to learn about investing is to first get familiar with some basic concepts. In particular, you should be familiar with the misconceptions that most people have about investing.

The first one is that you have to work at a job in order to make money. And since there are only so many hours in a day, you are typically limited in how much you can make at any one job. The problem is that you should be making your money work for you through investing, instead of you doing the work yourself.

The next misconception is that wealth isn't just the amount of money or assets that you have. True wealth refers to more than that. Being able to make money without having to actually do any labour for it represents more wealth than the final dollar value of your assets.

Something else a beginner investor needs to know is that income earned through employment is almost always taxable. But with the right tax shelter, your investment income will not be taxed. To make the most from compounding interest, this is an important fact. If you start off with $40,000 and are taxed for a total of 40%, you're going to lose $16,000. But with a tax shelter, you not only save that $16,000 once, but each and every year afterwards as well plus interest.

If you decide to work with a broker, fund manager or any other kind of financial advisor, you need to make sure they are successful and wealthy themselves. An advisor who can't make money for himself should not be trusted with your wealth. An advisor can be extremely helpful, but there is no reason why you can't do some free research on your own using the Internet.

That covers some of the important points for beginner investors, though certainly not all the areas you should be learning about. In order to make money with investing, you also need to know about:

  • Setting Goals - You must be able to set goals so you can navigate successfully regardless of events going on in your life.

  • Stock Market - Even beginners need to learn about the stock market in order to invest wisely.

  • Property - You can't ignore real estate as an investment tool. There are ways to buy property with no money down that can lead to great investment income.

  • Investments - Do you even know what kinds of investment options you have for your money?

  • Business - There are some simple ways to start building your own business without having to give up your current pay check.

Don't worry, you don't need to learn all of this overnight. Take one area at a time and focus on it. Over time you will learn, improve and make changes, then you can diversify so you have a balanced portfolio. Some things may be more successful for you right away, but in the long term you should still keep yourself and your investments balanced by at least trying more than one thing.

Maxwell Hill is the editor of Ultimate-Wealth-Made-Easy.com, the guide to creating personal wealth and abundance. Read more about the stock market for beginners. - Copyright: You may freely republish this article provided the author, text, active links and this notice remain intact.

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