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10 Best Investment Advice for Young People

If you are a young person, there is no denying the fact you want to live life to the fullest. There is nothing wrong with that. But another fact is, only few young people think of investing part of their income for the future.

That’s either they don’t know much about investing or they’re simply confused of how to start.  And that is why I have written on some top investment advice to guide you, so you don’t eat, drink or wear all your future today.

What should I know before investing?

1. Read about investments

Investing itself isn’t difficult, but the technicalities can be overwhelming sometimes. So as a young person, and a beginner so to say, you must familiarize yourself with some terms of the trade.

Terminologies will help you understand how the market operate, and guide you on making the right choice of investment. Don’t leave your money to chance. Don’t just jump in.

Take some time to read and understand what you’re investing in, and how can the best out of your money.

2. Have a financial goal

Investment advice
Investment goals

There are a lot of investment packages on the financial market. Don’t just decide to invest in anything at all, anyhow. Write yourself a financial goal.

Are you investing towards your education, a vacation, marriage and childcare or travel? The decision you make will guide you on what to invest in, and how to go about it.

Also Read:
a. 30 Personal Finance and Money Saving Tips in 2022
b. 6 Differences Between Treasury Bill And Fixed Deposit

The urgency of your goal will help you commit your investments. It will also keep you from liquating it prematurely for any other purpose. So, set a financial goal and invest towards it.

3. Always Start Small

Crawl, stand, walk, run and then think of flying, if you can. It is so natural, isn’t it? The same applies to investing. No investment can guarantee you returns. We have seen some of the best banks collapsed, stocks dip and cryptocurrencies crashed.

You don’t want to wake up to any of these shocks as a young person with so much goals. I am not being pessimist, but nothing can be certain at least you know that from that last two years.

So start your investments with smaller amounts, and then you can try bigger ones later. That way, you’re testing the investment system yourself, and not being tested with other people’s vague testimonies.

Starting small also helps you prevent lockup cash in investments. You don’t want to go hungry whiles you own stocks, do you?

4. Avoid Lump-Sum Investment

Investing is a strategy. It is just like trying to win a computer game. You have to deploy all your skills to lead the board. Win you play your cards well; you get the biggest bite.

All I am trying to say is, never try to invest a huge sum of money all at once for the long term. Instead of putting $10,000 in bitcoin at a price of $30,000, invest $3,000 for a start and spread the remaining $7,000 over a period of time.

All over the world, prices and interests on investments go up and down. It is very much part of the game and you must be ready to stomach it.

Yours is to time the market and buy at the different dips. If you invest all at once and there is a major fall (as we see with bitcoin; from $64, 000 to about $19,000), percentage of the fall is the percentage of your loss.

But if you bought it at different prices, the impact won’t be hard on you. Don’t try the “all-in or all-out” advice. Leave that for the gamblers. You have a financial goal, so stick to it.

5. Be prepared for losses

If you are a beginner, the falling and rising in value of your investments can freak you out. I nearly lost it with bitcoin in times past. I mean, putting your money in an asset tonight and waking up to a percentage loss the next morning can be crazy.

But that is how the market operates. Nothing is guaranteed. Scandals and world events affect almost everything including your investments.

You see that bitcoin that nearly broke me, I made my gains later. So, the losses will come, but be patient with your investments.

6. Automate Your Investments

For many, even before it gets to pay day, they had spent their salaries in advance already. I perfectly understand your situation and here is solution for you; automate your investments.

Automating your investments means that, the amount you wish to invest would be directly transferred from your salary account to your investments account. So before your salary gets to you in hand, the deductions have already been made.

This way, you wouldn’t have to go the bank and withdraw cash to invest in your portfolios. The process eliminates unnecessary withdrawal fees, and helps you commit to your investments.

7. Always Diversify your investments

What should I use to diversify my Investment?
Diversification of investment

Don’t put all your eggs in one basket is not a saying for just eggs laid by a hen. It is also a thumb of rule of investing.

While oil prices are going up, stocks are dipping, treasury bills are doing good and bitcoin is crashing. It is a clear indication that, it isn’t safe to rely on one type of investment.

Read This:
a. Treasury Bill in Ghana: How to Invest in Treasury Bills
b. How To Invest In Stocks On The Stock Exchange Market

When you invest in a portfolio of assets, the losses incurred by one asset is covered up the gains of the other. The right mix of investment diversification is very important. So try to invest in different sectors, different economies or different assets.

8. Start Investing Today

There is no perfect time to invest. But, if you’re young and you’re online reading this article, you have to start investing as soon as you can.

If you invest now for the long term, the benefits of compound interest can be exciting. The traditional formula is income – expenses = invest; I say income – invest = expense.

Once you start, always try to take your investing amount form your income, and spend the remaining amount on anything you want.

9. Think long term

Investment Advice For the long term
Long term investment

No one sows a seed today, and dig it up the next day to see if it has grown. If you decide to invest in the right assets, you have to give it time mature.

Don’t be checking in on your balance every minute to see if you earned an interest. It doesn’t work like that. Try to remain calm and leave your investments to grow.

The 3, 4 or 5 years’ financial goal should be the aim. So don’t get worried over short-term market fall, there would always a “bounce back”.

10. Seek Investment Advice

I put this point last because, if you feel I confused you, don’t be afraid to talk to investment professionals for more info. They are more trained to provide you with the right kind of investments that meet your needs.

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