Have you ever had the pleasure of watching a baby learn to walk?
Have you noticed how the baby stumbles and falls? But after many attempts of the baby learning to stabilise his/her steps, the baby finally gains the confidence to take his/her first and future steps.
If you are new to investing, you maybe like a new born baby. But with time you could eventually find your footing with this money practice. It may be daunting to venture into, but armed with knowledge and discipline, you could gain the confidence to become a smart investor.
Investing is the practice of placing money into instruments (such as stocks, mutual funds, startups, business ventures, real estate) which could generate returns whether in the form of profits, dividends, capital gains or interest.
Here are some tips to gaining investor confidence:
- Get the big picture: It’s a good practice to know where you stand financially. There is a financial measure called the net worth. You simply take your total assets (what you own) and subtract it from your total liabilities (what you owe). If your total assets are $1,000 and your liabilities are $500, then your net worth is $500. If your liabilities are greater than your assets, then you may have a challenge. Your cash maybe tied up in too much debt.
- Liberate your cash flow: You maybe interested in investing, but you may not have the cash flow necessary to do so. Essentially when you pay money to your creditors, it flows out of your pocket into your creditors’ pockets. I was once asked the question, if your budget your money and there is no room in your budget to do more with your money, what do you do? I said the key is to repay your debts as quickly as possible. That way you could do more with your money. No more than 35% of your income should be tied up in debt.
- Practice Financial Leadership: The key to liberating your cash flow is to engage in healthy money habits. Financial leadership is giving your money PURPOSE and DIRECTION. You give your money purpose via goal setting and you give your money direction via budgeting. Goal setting gives you the confidence to charter your financial course. You determine what’s the best route to take. And once you have a clear picture in mind of where you are going, you are going to be deliberate in your decision making (budgeting).
- View your money with a different perspective: Your money is your seed. Don’t think you don’t have enough to start investing. I started my company, but I didn’t have the money to invest in it initially. Your money has the potential to grow, much like a seed has the potential to grow into a tree. Stop seeing your money as something less, when truly it has the potential to do more.
- Know you’ve invested money before: Believe it or not, you’ve invested your money before. You know your college degree you obtained, you invested in your development. You know the gym membership you acquired, you invested in your health. Do you remember the returns you got? You do have the ability to invest! You may not have invested in financial instruments before, but with the right tools and knowledge, you could build your portfolio.
- Be open to learning: When it comes to investing, you need to know what type of investment you are putting your money in, how the investment works and the returns you earn from the investment. I have seen this quote quite often. Don’t invest in anything you don’t understand and it’s very true. I wouldn’t advise you placing your money in instruments you don’t fully grasp. Do your research or seek a finance professional like myself. By the way, I do welcome you having a meeting with me.
- Know the level of risk you are willing to take: Each one of us has different levels of tolerance, especially when it comes to taking risks. If you are not quite ready to take the road to investing, then don’t. You may not be ready now, but you will be. If you need to save a lump sum of money in order to start investing, then do so. If you have a monthly amount you can readily invest, then do so. It’s really about what you’re most comfortable doing at the juncture of your financial journey.
Melinda Belle is the visionary and founder of Astrape (As-strap-pay) Finance Inc., the caring, knowledgeable, trustworthy, financial company guiding you to financial stability and prosperity through education, sound planning and advice. Melinda sees her role as that of an architect and is committed to the shaping of financial landscapes of businesses. She also crosses over to the personal side of finance, teaching families and individuals to manage their money and create wealth.
She is also the author of My Money & Me. A book which takes a closer look at how your behaviour and mindsets affect the way you manage your money. (www.astrapefinance.com)
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