How to Invest Money: 4 Tips to Help You Get Started

Learning how to invest money could open up the opportunity to make your money work for you. 

Better yet, there are a wide range of investment opportunities that you can choose from based on your income, your investment goals, your risk tolerance, and more. 

The more you understand the world of investing, the more knowledge and experience you could potentially have when you decide to invest.

So, how can I invest my money if I’m just getting started?

In this article, we’ll talk about some of the different types of investments and what you might consider doing if you want to start investing your money. Investing starts with taking a good look at your financial situation and investment goals. 

Keep reading or use the links for tips that can help you learn how to invest your money.

4 Factors to Consider Before Investing

While investing your money could potentially help set you up for the future, investing is a big decision that you shouldn’t take lightly. There are a handful of things you might want to consider before you start investing, including: 

1. How Much Can You Afford to Invest?

Understanding how much money you can afford to invest can help you avoid investor mistakes—like risking too much money and finding yourself in financial distress—and find investments that fit your financial situation. 

While you generally don’t want to invest more than you can afford to, your return on investment is partially dependent on how much you invest. Higher investments open the opportunity for greater returns, but by the same logic, larger losses.

The amount you’re able to invest depends on several factors, including:

• Your income
• Your current expenses
• How much you have in savings 

If you’re not sure how much you should invest or how to invest with money, you might consider working with a financial advisor to set goals.

2. How Much Energy Do You Want to Dedicate 

Learning how to invest your money is only part of the battle; investing can require a lot of work, so you need to make sure you’re up to the task of managing your investments on an ongoing basis. 

The larger and more diverse your investment portfolio is, the more energy you may have to put in. Think about how much time and energy you’re willing to dedicate to investing and use that information to help you find the opportunities that best suit that level of ongoing management.

Keep in mind that different investments offer varying potential returns. Simple investments like bonds and savings accounts may be easier to manage, but that may also mean a smaller return on your investment.

3. What Level of Risk Are You Willing to Take On?

Virtually all investments come with risk, so consider how much risk you’re willing to take on before you decide to invest. While high-risk investments with potentially massive returns may be tempting, they also come with a higher level of risk. Meaning they’re not suitable for all types of investors. 

In fact, you might prefer a relatively low-risk investment that has the potential to provide smaller returns. Choosing investments that fit your risk tolerance can help you take steps to minimize losses when it comes to your overall investment strategy.

Of course, there’s no way to completely eliminate the risk of investing.

4. What Are Your Investing Goals?

Setting investment goals is an important part of learning how to invest money and working toward building a better financial future. 

Perhaps you want to save money for your children’s college expenses, or maybe you want to invest your money for retirement. Setting investment goals gives you something to work toward and a metric for measuring the success of your investments. You can monitor your investment accounts to see whether you’re on track to meet your goals. If you’re not, you might consider making changes to your investment portfolio.

Everybody has different investment goals, so you may want to consider taking some time to figure out what you want to work toward before you take the plunge into investing. 

If you need help setting clear investment goals, consider working with a financial advisor. 

What Should You Invest Your Money In? 

For many people, choosing the right investments is a major obstacle in the process. Part of learning how to invest money is learning what to invest your money in, which goes far above and beyond stocks and bonds. 

• k, allow you to put money away for retirement. This money is invested based on your selections. Typically, the intent is to leave money in the account until you decide to retire and during that time, it’s accruing compounding interest and growing your money.

4 Tips for Starting to Invest Money

As a beginner investor, taking those first steps can feel overwhelming. There are so many different types of investments and investment terms, and there are several important factors to consider if you want to try to avoid mistakes and make informed investments.

So, how can I start learning how to invest my money? Here are four tips to help take those first steps:

1. Do Your Research 

As tempting as it can be to start investing as soon as possible, there’s a lot to learn before you do. Investing is a long-term game, so take some time to do your research before you start investing your hard-earned money. 

There are a lot of helpful resources online—like the Mint blog—that can teach you about the different types of investments, or you can attend an investing seminar or workshop in your area. The more energy you’re willing to put into learning, the better position you could be in to make investment decisions.

2. Keep an Eye on Your Investments 

One mistake a lot of investors make is not keeping an eye on their investments. When you invest, keeping track of your investments can help you monitor their performance and pivot your strategy as needed. If you’re not keeping a close eye on your investment accounts, you could be losing money without even knowing it.

Keeping track of your investments can potentially give you more control over your investment portfolio, like making an early decision to move your money if you’re seeing a downward trend. You can use an app like Mint to see how your investments are doing at any given time.

You can also check out some of these tips from Investor.gov to help you protect your investments.

3. Stay within Your Budget 

The amount of money you invest has a direct effect on how much you could potentially profit, but large investments aren’t right for everybody. Take a moment to figure out how much you can afford to invest without sacrificing your ability to put food on the table and pay your bills. 

While there may be opportunities for larger investments when you receive your tax return or a bonus from work, sticking to a budget can help you avoid putting yourself in a sticky financial situation because you lost more money than you could reasonably afford to. 

With an investment budget, you can take measures to ensure that you take advantage of investment opportunities, while also ensuring you have enough money to pay your bills and feed your family.

4. Consider Working with a Financial Advisor

While there are a lot of resources that can teach you how to invest money and manage your personal finances, investing can be complicated. Working with a financial advisor can help you understand your budget and set clear investment goals, that way you have the information you need to make smarter investments. 

Your financial advisor can even help you decide how to invest your money to meet your goals.

Prepare for Your Investment Journey

With the information in this post, you are closer to starting your investment journey. In addition to considering the above tips, you can also use tools to help you manage your investments. With the Mint app, you can not only track your investments but you can also manage your personal budget—allowing you to keep an eye on your finances from your phone.

Whether you’re ready to take the leap now, or are just getting familiar with investing concepts, these tips and tools will be here for you whenever you need them.

Sources: Investor.gov | Statista

This is for informational purposes only and should not be construed as legal, investment, credit repair, debt management, or tax advice.  You should seek the assistance of a professional for tax and investment advice.

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Source: mint.intuit.com