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How To Get Started With Investments

Entrepreneurs tend to be risk-takers who enjoy diving into new fields. They’re also often in the position of scrambling for ever better and more efficient ways of raising funds.

If you’re considering investing for the first time, then keep in mind that most strong earnings are attained over a longer period of time. However, there are some ways that you can increase your chances of earning faster and more reliably.

Start small.

There are minimum buy-ins for investments, so you do require some capital to get started, but don’t risk everything all at once, especially before you know what you’re doing. There are also fees to take into account. In addition to the sum being invested, you may have to pay a transaction fee any time an action is taken, such as a purchase or sale. Pay attention to currencies. If you’re dealing in a foreign currency, then you will have the exchange rate and also a transfer fee to convert from USD to the foreign currency (and back) to take into account.

Assess your comfort with risk.

This will be a combination of your personality and financial status. You may have a temperament that is very comfortable with risk, but limited finances, in which case you should opt for a less risky investment strategy to make sure that you don’t endanger your finances. On the other hand, if you’re risk-averse by nature but have a strong pool of available funds that are underutilized, then you could opt for a low-risk or medium-risk investment strategy to make the most of your investment efforts.

Diversify your investments.

You can optimize your results by using subject matter expertise to invest in a sector that you understand. However, you expose yourself to more risk if your projections aren’t perfectly accurate. Diversifying your investments is a good way to mitigate risk – spread it out over multiple sectors and regions or currencies so that the others balance a downturn in one market at any given time.

Investigate partners.

You have a number of choices on how to go about investing. You could use a brokerage firm for full service and greater guidance – but with higher fees. You could work with a discount broker for less, but you will need to take greater responsibility for learning independently. Some online trading falls under this category. Sometimes, you can also purchase shares directly from a company through a direct stock purchase plan or microloan.

Do your research.

Obviously, you can’t predict changes in the markets with 100% accuracy, but you can improve your odds with broad research. There are a few different levels to consider. You need to understand the history, standing and projections for the specific investment that you’re making. You can look up a company’s current valuation, research its historic valuations, read its shareholder statements and budgets, and monitor its plans for the future.

However, for best results, you want to look beyond a single company and its choices and standing. You should seek to understand its position in its sector. How does it stack up against its competitors? How much competition does it face? How much demand is there for its goods or services, and how resistant to obsolescence are those goods or services?

There are other factors at play besides the sector and competition. Consider sociopolitical influences. Could a change in local, regional or national governments impact the profitability of the company in which you’re investing? If it’s a foreign-owned company, then could trade agreements and relationships between the US and its home country have an effect? Currency fluctuations and a shift in the exchange rates could also change the investment’s value to you.

Changes in popular opinion and consumer preferences can also boost or undermine an investment’s value. For that reason, it pays to stay up to date on current events in a larger sense. Using a reliable source of up-to-date information and investments worth your time is a good way to stay informed and do research efficiently. The Bull share tips and they also offer breaking news and stocks of note on the market. These kinds of resources tend to focus on a specific location or sector to help you hone in on only the most relevant stocks.

Investing offers a great deal of opportunity for individuals and companies but comes with a steep learning curve, some drain on time, and varying degrees of risk. Avoid investing if you don’t have the time to learn, do the research, and monitor your investments, or opt for a full-service brokerage firm.

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Daniel Goh is the founder and chief editor of Young | Upstarts, as well as an F&B entrepreneur. Daniel has a background in public relations, and is interested in issues in entrepreneurship, small business, marketing, public relations and the online space. He can be reached at daniel [at] youngupstarts [dot] com.

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