INVESTING
BEGINNERS PRINCIPLES BASICS 101 TEACHING AND
LEARNING PERSONAL FINANCE COURSE GUIDE STRATEGY TEEN PRACTICAL ADVICE IDEAS FREE
EDUCATION ARTICLE
Before
investing, first understand basic investing
principles.
BEGINNER INVESTING PRINCIPLES
Are you a beginning investor?
Then you need to start with the
basics.
Here are some basic principles of
investing that you should understand
before investing your money.
Also, see our our
investing lessons section for some helpful
teaching and learning worksheets and lessons on
investing.
BASIC
PRINCIPLES OF INVESTING
Begin Investing Now
Do not procrastinate. Begin now because
an early start can make all the difference. An early start provides a long
time horizon for compounding to show its true benefit for the investor.
Know Yourself
Current situation: What is your current net worth, monthly income and expenses?
Where can you reduce your expenses? How much debt are you carrying? At what rate
of interest? How much are you saving? How are you investing it? What are your
returns?
Your Financial Goals: What are they? How much will you need to achieve them? Are
you on the right track?
Risk Tolerance level: How much risk are you willing and able to accept? Risk
tolerance is determined by your personality, age, job security, health, net
worth, emergency fund, and the length of your investing horizon.
Sort Out your Finances
Before you even think about investing, know where your money goes each month.
Track your spending habits. If you're carrying debt at a high rate of interest,
especially credit card debt, you should unburden yourself before you begin
investing. Amass enough to cover three to six months of expenses for
emergencies.
Never invest in anything you don't understand.
Invest Long Term
Invest for the long term. Do not be influenced by short-term fluctuations. These
are inevitable as all economies as well as businesses experience the boom and
bust cycle. Don't try to time the market. Get in and stay in. Review your plan
periodically, and whenever your needs or circumstances change. If you are not
confident that your plan makes sense, talk to an investment advisor or someone
you trust.
Investing in
Stocks and Mutual Funds
A
long term view helps you to safely invest in 'riskier' investments, such as
stocks, which the market rewards in general. This requires patience and
discipline, but it increases returns. This approach reduces your choices to two:
stocks and stock mutual funds. In the long run, they're the winners. The
additional risk is worth it due to the power of compounding. 10% a year for 20
years is 570%, but 7% a year for 20 years is only 280%.
Arm yourself with knowledge.
Always do your homework. Knowledge is power. Understand personal finance matters
that could affect you. Understand your current investments and the risks
associated with them. Be cautious when evaluating the advice of anyone with a
vested interest.
If you're going to invest in stocks, research companies until you understand
them. Consider joining an investment club. Examine historical data or
participate in a stock market simulation. If you don't have the time, consider
mutual funds, especially index funds.
Get Help If You Need It
The do-it-yourself approach may not be suitable for everyone. If you try it and
it's not working, or you're afraid to try it at all, or you don't have the time
or desire, then you should seek professional assistance.
If you want others to handle your financial affairs for you, remain involved to
some degree, to make sure your money is being spent wisely.
For
teaching and learning about investing:
TEACHING INVESTING LESSONS
All about investing money and money
management. Learn basic investing
and financial concepts.
Including stocks, the stock market, interest, income statements. Lessons, lesson
plans, and worksheets.
Before
investing, first understand basic investing
principles.
To
teach and learn more money skills, personal finance, and money
management, please go to the