As a young person, time is your most valuable resource. Money and experience may be scarce as you work your first real job and begin paying your bills and student loans. At this point in your life, prioritizing investments is not appealing. The fear of losing the little money you have to bad investments can be a very potent put-off.
Investing isn’t a “get rich quick” scheme. It takes time for most investments to start paying off. The longer your money grows in your investments, the more likely you are to get a higher return. Another advantage of investing young is the time and flexibility to learn and recover from errors.
What are the common investment types?
Investments abound ranging from scams to legitimate opportunities. To avoid getting burned, you need to find a legitimate investment outlet. Gambling is more likely to leave you destitute. Investments can be categorized into four: real estate, commodities, stocks, and derivatives.
Real estate: There are numerous strategies for investing in real estate including renting properties to tenants, flipping houses at a profit, to mention but a few.
Commodities: Commodities are physical substances that are traded on the open market. They include valuable goods such as food and oil.
Stocks: Stocks are contracts that give you partial ownership of a company. As an investor, you buy stock of a company. The company uses this money to expand or fund their expenses. You make money by buying a stock on the cheap and selling it when its price goes up.
Derivatives: Derivatives are also contracts whose value is derived from an underlying entity. This entity can be an asset. Futures, forwards, options and swaps are the most popular types of derivatives.
Consider what type of investor you want to become, so you know which investments you should make. After you have picked a category, start investing as soon as possible. While risk is unavoidable, you can avoid making gambles and instead focus on solid investments for short or long-term gains.
Investing for fun
Investing can be very scary and complicated especially with all the fancy terms and boring graphs involved. While some make a career out of it, it could be a source of extra income for you as you pursue financial freedom. Getting started on, for example, stock trading has never been easier than it is today. There is so much information on stock Message Boards and news platforms to help you learn and improve. Tech that was not available several years ago can now help prospective investors, kick-start their investing adventures without a hitch.
Using these resources to get a better understanding of the various investing concepts can greatly improve your chances of success in the market. Employing strategies like micro-investing, which lets you buy fractional shares of stock, can give you much-needed practice and mastery of the craft. As your money grows, should your investment knowledge and skill. By investing for fun with money that you do not mind losing, you develop an investment mentality that sets you up for success.