3 Questions to Ask When You First Start Investing

Last Updated April 2nd 2023
3 Min Read

Investing in your future is about more than simply ensuring you have an emergency savings fund in place, and a good budgetary strategy. While building up your savings can certainly help to give you peace of mind, most financial experts agree the only way to grow your money is to learn how to put your resources to work, with solutions like stocks and mutual funds.

However, while the barrier to entry for new investors has diminished in recent years, thanks to the advent of new technologies and applications, it’s still a daunting concept for many. If you’re new to the landscape, there are a few questions you’ll need to answer before you dive in and start spending. Here are three of the most important queries you’ll need to consider before you get started.

What Are Your Goals?

For many, the goal of investing seems relatively obvious. You want to make money and increase your wealth. However, if you’re hoping to boost your chances of success, and choose the right strategies for your portfolio, you’ll need to think a little more carefully about your targets. Ask yourself whether you’re trying to access and unlock additional money right now, or whether you’re hoping to build extra cash for your retirement. 

How quickly do you want to see a return on your investment? How much money are you hoping to make, and how much effort are you willing to put into learning about the industry and managing your investments? Do you know how to pick stocks or not? Establishing clear goals and balancing your targets with your ability to take on risk will help you to come up with a strategy that works for your specific needs. 

How Do You Want to Invest?

Once you have a clear view of your goals, you can begin to think about how you want to get started with investing. If you’re new to the space, it’s usually a good idea to start with a relatively simple strategy of investing in stocks and bonds. However, there are a few different ways you can start purchasing assets in the stock market. If you’re relatively confident in your skills, knowledge, and ability to research opportunities, you might decide you want to choose funds and shares on your own. 

If you’re not as experienced, you can opt to have an expert manage the process for you. There are plenty of experts who can take over the process of managing your portfolio on your behalf for a small fee. If you don’t have the knowledge you need up-front, but want to take an active approach to investing, you could consider taking out a small personal loan to have the needed funds available to access a course and develop your skills. 

How Will I Fund my Investments?

Finally, it’s worth thinking about how you’re going to find the money you need to start working on your portfolio. The good news is the changing landscape has opened the door to investment for people from a range of backgrounds, so you don’t necessarily need a huge amount of money to get started, depending on the shares you’re interested in. However, it’s worth examining your budget and looking for ways to increase your access to available finances. 

Remember, while there’s no one-size-fits-all guide to choosing how much money you should invest, you should never put any money at risk that you can’t afford to lose. If you’re not sure what’s actually affordable for you, determine your risk tolerance by speaking to an advisor about your options. Keep in mind, while you can also take out a personal loan for investing, you should only do so when you’re sure the pay-off will be larger than the cost of interest.

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