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Things To Think About Before Getting Involved In Investing


There are various benefits associated with investing. It can be a great way to boost your income, providing you with financial security during a troubling time. Smart investing also comes with the possibility of long-term returns, meaning it can be better to invest your money than leave it in your regular bank account (even if you are earning interest). 

That’s not to say, however, that investing does not come without its challenges. Regardless of which market you chose to get involved in, from Crypto to Real Estate, the market can spiral at any time, and sometimes without warning. As such, it's important that you weigh your options carefully ahead of time so that you’re able to make smart, measured investments.

 

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Photo by Austin Distel on Unsplash

 

With that in mind, here are some things you might want to consider before getting involved in investing. 

 

Understand how to make a trade. It goes without saying that you should at least have a basic understanding of how to trade before making an investment. After all, failing to do so means that you’re entering the market ‘blind’, meaning you’re more prone to making mistakes that could cost you further down the line. As such, you should do plenty of research ahead of time, both on investing in general and the specific market you’re looking to get involved in. Our blog is packed with investment advice and market studies that you may find useful. 

 

Learn the appropriate terminology. Another way in which you can protect yourself when getting involved in investing is by learning the investing terminology every investor must know ahead of time. For example, you must know your APR from your APY, and your diversification from your dividend. Failing to understand the jargon could land you in a difficult situation, as it means you don't quite understand what you are doing. By brushing up on terminology, you’ll also learn more about what you are actually investing in. For example, as it's a digital investment, many potential investors don’t really know what cryptocurrency is. 

 

Consider your options carefully. Before investing any money, you should also ensure that you consider all of your options carefully. For example, if you’re planning on getting involved in the crypto market, there are hundreds of different ‘coins’ for you to consider (with more launched each and every day). Ideally, you should consider a handful of different cryptocurrencies, and weigh up the benefits of each one carefully. For example, you might want to consider the dogecoin advantages, such as no-third party control, low price per token, historical data, and great upside potential. 

 

Know your myths from your facts. One of the biggest reasons why people chose not to get involved in investing is due to the fact that they’ve overheard some common investing myths and have taken them as fact (new highs mean the stock market is bracing for an imminent crash, you need a lot of money to begin with to get involved in investing). To be blunt, there is often a lot of scaremongering in the investment market, especially around new investment opportunities. The easiest way to separate fact from fiction is, unsurprisingly, to carry out the appropriate research, ensuring that you only source information from reputable sites (and not some stranger’s Twitter account). 

 

Know how much you can afford to lose. If you’re looking to trade like a pro, you must first understand your current financial situation. That is, you must ensure that you never invest more money than you can afford to lose. Ideally, you should be in a relatively secure financial position before starting - as investing is a tool to boost your income, not resurrect it entirely. While advice varies across the board, you should set aside a set amount of money each month which, if it were to vanish entirely, you would not miss (i..e it would not set your bank considerably). If you are still unsure, a financial advisor may be able to offer your records and provide you with some guidance. 

 

Understanding investing is ‘a risk’. Investing, even in a market that appears relatively stable, will always come with an element of risk. As such, it's essential that you understand this before you invest your hard-earned cash. Thankfully, there are various ways in which you can reduce risk, such as by hedging or diversifying your investment portfolio, working with investment brokers, or trading only with reputable companies. The latter is particularly important when you consider the sheer number of  investment scams reported each year.  

This is a contributed post.

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