If I’m completely honest, I’m feeling a little nervous about getting into investing. What if I lose everything? As I mentioned in my post on planning for retirement, one of the good things about being young when you’re working on your retirement is that you have time on your side. The other benefit is that you can afford to be more aggressive on investments because you can afford to make a few mistakes.
The truth is, when it comes to investing, sometimes you need to take risks to make any progress. There are different levels of risk, but if you leave your life savings in a long term savings account you’ll have enough to deal with inflation and maybe a little spare here and there, but not too much else, as the prices of everything else will rise somewhat proportionately.
I read a book that was discussing investing and it said if you don’t take a risk you’re taking more of a risk.
Putting your cash in a savings account and letting it sit there, barely growing, is a bigger risk than trying something.
I am not suggesting you run out now, withdraw all your savings and throw it at some shares, but I think taking calculated risks is less of a risk than doing nothing.
Buying a property is a risk – what if the market drops and you find yourself owing more in mortgage repayments than the property is worth?
Buying shares is a risk – what if the market drops and your shares are worth nothing?
Studying at university is a risk – what if you spend tens of thousands of dollars on your education only to come out jobless?
But it can also be said that buying a property, investing in good shares and studying could be three of the best investments you’ll ever make, right?
You need to make calculated risks, weigh up the pros and cons and move forward. The month of May is all about saving for me, but the next month all the money I make will be going into managed funds. After that, I’ll start investing in shares.
I’ve started reading a little more to do with shares so I can make informed decisions. I’ve started browsing the online exchanges to see what shares are rising and falling – and by how much. I’m learning about a stock’s intrinsic value, which is what it’s actually worth rather than the value it has on the stock market. I’m not rushing in until I know more about everything and can make a well-informed, educated decision.
So if you’re looking to start investing, I say start with educating yourself. Follow the market for a while, pick some shares you think will do well and map their profits or losses over the course of a few months. Why did their value rise or fall? What would you do differently? Learn before you’ve even put a dollar down and chances are your investment will go much more smoothly.
I’ll be sharing on my blog my honest trials and tribulations as I move forward with investing.
For those of you who are further along this journey than I, please feel free to share some investment resources you’ve really enjoyed. I’m all ears!