Most people fail to get started managing our money because we're intimidated or don't know where to start.
Here are a few tips that will give you reference points, before you dive in the investment area:
1. When it comes to the stock market, past behavior won't always predict the future.
No one can reliably predict the market. While professionals can make educated guesses, predicting the market is predicting the future, and no one can do it.
2. Investing is always a risk.
You could earn money or lose it, so if you'll need quick access to liquid cash in the short term, you probably won't want to invest.
3. Starting early is a major advantage.
In your 20s especially, your biggest asset is time. Plus, if you lose money in the market, you'll have more time to make it back before you need it.
4. You need a goal before anything else.
What are you investing for? What is the purpose? What is the goal or objective?
Once you have your objective established — saving for a home, your kids' education, a vacation, or retirement — the time frame will become clear and you'll be able to figure out how to invest your money.
5. You invest differently depending on how much time you have.
Your time horizon is the number of years between now and when you'll need to use the money you're investing. It should become evident after you establish your goal.
6. Putting all of your money in one place is asking for trouble.
Diversification means spreading your money out among different kinds of investments. While there are a lot of opinions out there about how diversified an investment portfolio needs to be, most everyone agrees that putting all of your financial eggs in one basket is a recipe for disaster.
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