So you want to be an investor - welcome to the club! Investing is not something that is saved for the ultra-rich, those born with an inherent ability to save money, or a fancy education in finance or business. It’s a skill that can be learned, practiced, and mastered by anyone who chooses to be diligent in its course! Here’s how you can get started today on a lifelong journey towards wealth through investing.
Step One: Invest in knowledge.
Just like learning a new language or playing an instrument, you'll need to study and practice in order to master the skill of investing. Start by reading a few books about money management from some people who know a thing or two about investments. There are millions of books available on the topic of investing, but “Rich Dad, Poor Dad” by Robert Kiyosaki, “Think and Grow Rich” by Napolean Hill, and “Total Money Makeover” by Dave Ramsey are all great places to start. These finance books will give you insight into the money habits you should be practicing and motivate you to stick with money-saving goals so you can work towards eliminating debt and saving to invest. Trust us, once you read these books you will want to keep learning more and more!
Step Two: Decide what type of assets you want to own.
Once you're on the right path with your money management, it’s time to start thinking about what assets you want to invest in. Assets are anything you purchase that puts money back in your pocket - real estate, business equities, stocks, bonds, notes, and intellectual property (such as copyrights, patents, trademarks, and royalties) are all forms of assets. Each type of asset has its own pros and cons, unique quirks, legal traditions, tax rules, and other relevant details. You might find yourself drawn to one, the other, or some combination of investments based on your existing resources, knowledge, personality, or the opportunities available in one asset class at any given time compared to another. Deciding which avenue is the right one for you might take a bit more research, but once you’ve decided how you want to invest you can clear the way for making proactive goals.
Step Three: Save money and eliminate debt.
You don’t have to wipe out all your debt in order to invest, nor do you have to save a ton of money just to get started. But it’s important to have a good grip on your finances and free up some cash flow that you can use to invest. The amount of money it will take to start acquiring assets differs depending on which avenue you decide to go down, but a general rule is that you should have a two or three thousand stashed away in emergency savings and have a plan for paying off your debt (and not acquiring more!) before you start investing money in assets.
Step Four: Set your goals and get going!
Once you feel confident that you’ve got a grasp on your finances and feel knowledgeable about which assets you’d like to pursue, it’s time to set your goals and be proactive about reaching them. Grab a sheet of paper and start planning your short-term and long-term investment goals. If you want to get into real estate, a short-term goal may be to purchase a duplex within two years or a commercial space within five years. If trading stocks and bonds is what you’re after, set a goal to find a broker and save the minimum deposit for your brokerage account by the end of three months and start a portfolio by the end of the year. Talking with your broker, a financial advisor or a trusted mentor can also help you set realistic investment goals for yourself and stay motivated to reach them.
This is a very basic outline of the steps needed to get started on investing, there are many many tools at your disposal! As soon as you start investing your time in learning how to make investing a reality and taking proactive steps towards your goals, the money will soon follow.
Please feel free to contact us at info@dunhillfinancial.com, we would be happy to help you with any doubts related to investing.