Want to invest but don’t know where to start? Here are five basic steps for investing.
1. Define your goals
Taking the first step on your investment journey may feel daunting. However, setting clear goals with achievable targets can be a good place to start in the planning process. 'I want to retire at 60 with an after-tax income of $50,000 which will last at least 25 years' is one example of a goal.
2. Understand the investment basics
Some of the main things you need to understand include the different asset classes (for example, cash, Australian and global shares, property and fixed interest), how they perform, their relationship between risk and return, and why diversifying your investments (that is, spreading your money across different asset classes to help manage investment risk) is something you should consider.
3. Check your investments strategy options
There are quite a few investment strategies (or styles) that you can use to invest, build wealth and achieve your financial goals faster. But starting a regular investment plan by investing small amounts over time and re-investing distributions back into your investment funds are some simple examples.
4. Decide if you need help from a financial adviser
Strategising, keeping up with changes to tax and superannuation regulations, as well as watching market movements and tracking investment performance can all seem like a bit of a minefield. However, working with a professional, such as financial adviser, can help you navigate the complexities of investing as you work towards achieving your financial goals.
5. Start investing
No matter how much time you spend considering your strategies, watching the share markets or planning which funds to put your money into, until you place those investments, they can’t start working for you. While it’s often said that starting earlier on in life can be beneficial, making a start in investing and allowing yourself as much time to invest as possible can still be helpful.
Source: Colonial First State