4 Ways to Reach Investor Confidence

investor confidence

Are you thinking about investing but are unsure of how to get started? You’re far from alone. The world of investing is vast. Many times you may feel unfamiliar with the terms you hear, the headlines you read, and the advice people give you. Not to worry, there are a few simple ways to break down your decisions and achieve investor confidence. Only with confidence can you get started on the road to a more secure financial future.

Have a Goal in Mind

It’ll be easier to stay involved with your investments and to build investor confidence if you have a goal in mind. Why are you putting money away? Is it to save it for a rainy day, to help you buy a house in a few years, or to help prepare for retirement? All of these are common goals people have when they begin investing, and yours may be different. In any case, the goal needs to be focused.

If you can visualize what it is you want to do with this money, it will be easier for you to literally and figuratively stay invested, even when times get tough. Keep your vision for your funds at the forefront, no matter how far away your timeline reaches. This will help you stay the course, which is a key to being a successful investor.

Don’t Second Guess Your Risk Level

Everyone has different degrees of risk-tolerance based on factors like their age, their income, and what your future investment goals are. But what is risk-tolerance and how do you decide what yours is? A good place to start is with your age.

For example, if you’re in your 20s and are beginning to invest for your retirement, you have the tolerance to invest in potentially riskier vehicles like the stock market or real estate. This is because even if there’s a hiccup in the market, you have plenty of time to recoup potential losses. However, if you’re 50 years old and you have no savings, you may think you should look into high-risk high-reward investments. That’s not typically advisable based solely on your age, with no other factors like investor confidence in play. Simply put, you don’t have as much time to potentially recoup losses, since retirement is around the corner.

Income is also another factor to consider. Taking your age into account, do you also have enough income to supplement any losses you may face? For example, if you’re in your 50s, but living paycheck-to-paycheck — including your monthly investments, of course — then you need to make sure your investments are in low-risk retirement accounts. This could take away any big worries over potential market volatility.

There are many aspects to think about when determining how risky you want to get. If you’re still unsure, talk to a financial professional to get you started on the right track.

Know Your Fees

You have your goal in mind, and you know how much risk your investments can tolerate. So, what’s next? It’s time to put your investor confidence to the test. Unfortunately, this is when people begin to get a little hesitant and potentially lose steam. That doesn’t necessarily have to be the case, however.

If you want to get started slow, do something simple like investing in commodities. This might sound foreign, but you’re actually already very familiar with commodities. They’re a part of your day-to-day life. Whether you’re driving a car that requires oil, or you’re wearing a gold wedding ring, these materials are all commodities. Typically, people will invest in commodities as a part of their portfolio diversification strategy. You can even start smaller by buying gold and silver. However, be sure that you know about any fees that may be associated with your purchase.

It isn’t only commodities that are subject to potential fees. Stocks, Forex and Futures investments may all also have associated fees. For example, if you use a company to trade stocks for you, then you may be paying a fee per transaction or based on the amount of stocks that were bought and sold. Additionally, there may be minimum account balance requirements and brokerage fees. This depends on how you plan to invest your cash.

Before you pour your money into what seems like an investment that’s on-par with your savings goals, ask about any ongoing or annual fees you may be subject to. With that said, fees and taxes are a part of investing in general. Be sure to take these into account so you truly are getting the most out of your investments while trying to hit your goal.

Do Your Research… Or Work With a Professional

The market never truly goes on vacation, especially considering that global events can affect it. Wall Street is closed on weekends and bank holidays. However, events that take place – whether political, economic, or otherwise – can help shape what trading will look like when it reopens for trading. A big way to build your investor confidence is to have a financial planner who monitors trends and can suggest future investments to his or her clients.

However, that doesn’t mean you should stop reading the headlines. There may be something in there you can forecast that other people didn’t think about. For example, stocks like Scotts Miracle-Gro — which essentially is fertilizer — shot up ahead of some major marijuana votes taking place in 2016. Investors were encouraged to buy it. In fact, by the end of 2016, it rose about $50/share. This means, if you bought roughly 10 shares for $1,000 in January, by then end of the year, it would be worth roughly $1,500. That’s an easy $500 to make simply thanks to following the news and trends.

You’ll also want to do your own research occasionally to keep your financial planner in-check. If you have questions, ask them. If you think your portfolio should be rebalanced differently than it is now, speak up and explain why. At the end of the day, this is your money and your future at stake, so you want to be involved and informed.

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