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Top 5 Tips for First-Time Investors

Written by prositesfinancialMay 3 • 3 minute read

Inflation is marching forward at a dizzying pace. In the last year, it’s risen to an alarming 4.5% and higher, so that savings account you rely on for your financial security is constantly being outpaced. One important strategy to outrun inflation is putting your money to work through intelligent investments. If you’re a first-time investor, don’t let the prospect intimidate you. There are several ways to hedge your investments against risk. Here are five tips for you to keep in mind as you take your first steps into the world of investing.

1. Diversify

Diversification is the single most important way to minimize risk. A well-diversified portfolio should contain a wide variety of investment vehicles, from stocks and bonds to real estate and exchange-traded funds. As the old adage goes, never put all your eggs in one basket. A diversified portfolio mixes and matches investments across industries, investment vehicles, and even different countries. This way, a national recession won’t leave you penniless, nor will a devastating stock market drop.

2. Let Your Money Work for You

If you’re a first-time investor, it can be terrifying to see your stocks and bonds diminish in value, but a diversified portfolio doesn’t need to be adjusted every time the wind blows. Don’t be tempted to sell your property or stocks the moment your luck changes. A healthy marketplace comes with small rises and falls, and reactivity will only lose you money.

If you’ve chosen your investments wisely, have some faith in your choices. Keep your emotions in check and try to rebalance your portfolio quarterly at most. Trying to beat the market through active management rarely pays off and will leave you frequently anxious, so make a commitment not to sell unless you have a compelling reason to do so.

3. Be Alert to Scams

Every person who invests dreams of making a fortune overnight, but unfortunately, the marketplace is rife with scams and false promises. Be wary of unsolicited emails and calls, especially when the person on the other side of the line uses hard sales tactics. Great investment opportunities don’t need to be pitched in telemarketing, so research everything you’re told and give yourself at least a day to consider purchasing decisions.

4. Choose Between Pensions and ISAs

Pensions come with some impressive tax benefits, but ISAs offer tax-free access to your investment. Pensions don’t offer liquidity, though, so if you’re looking for a flexible solution, ISAs are your best bet. You may also consider mixing your investable assets in a combination of the two. If you’re unsure of which to choose or what’s a good balance for your goals, consult with a financial advisor who can consider your situation and develop a personalized strategy.

5. Choose a Good Platform

Investment platforms offer a huge array of fee structures and brokerage offerings. While fees are an unavoidable part of the process, don’t let them eat into your returns. As a beginner, it’s best to choose a hands-on platform that can support your decisions. Look for comprehensive technical analysis tools so that you can take full control of your portfolio. Remember that the most recognizable platforms earned their place in the market, so they’re well worth using.

The investment world might seem impenetrable and difficult to understand, but in time, you’ll find out that you can achieve a lot with patience, research, and a bit of common sense. It’s also worth consulting with an experienced financial advisor who knows the patterns of the market and can help you take your investments to profitable heights. While there’s no surefire investment strategy, being smart about your approach will help you to find opportunities you might have overlooked before.

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