Five steps to help you begin investing

Investing seems daunting, do follow these steps to reduce the stress and get you started.

07:23 26 December 2013

If you are ready to make a little more money—or a lot more money—than what you earn with your traditional savings account, there are many other options for investing your funds. If you are beginning the investments early in life, you will not need to be as concerned with risk, but you do not also want to throw your money away either.

Here are a few helpful suggestions for investing.

 

• Goals—decide what you want to do with the savings before you make any further decisions. If you want emergency funds, retirement funds, or something entirely different, your future decisions and investment strategies will vary.

 

•  Calculate your timeframe—if you are saving for retirement, figure out when your target retirement age is and then subtract a few years to be safe. If you are saving for a particular goal such as an initial payment on a home, then you can use whatever timeline you have set for obtaining your home.

 

• Risk level—once you have figured out your timeframe, you will have a better understanding of what risk levels you can withstand. This does not necessarily mean that you need to go with the highest level of risk you can; you should always take your personal preferences into account as well.

 

• Investment types—you may not have enough money to make a large lump sum payment. If that is the case, some of your investment options will be limited. Find out how much you can invest and then see what options are available to you.

 

• Costs—investing can be risky, and it is important to remember that there are usually costs associated with investments. You could lose significant amounts of money, or if you have a fund manager, you could pay costs to have him or her manage your investments.  Make sure earnings outweigh costs.