Patriot Federal Credit Union

Step 11 of 12 Steps to Financial Wellness-Start Investing

Step 11 of 12 Steps to Financial Wellness-Start Investing

With your retirement funds up and running, you’re ready to give your money its best chance at growth through your choice of investment options. The world of investing can be vast and confusing, especially to a first-timer. There are so many decisions to make, and each one carries with it the risk of loss, or the promise of growth for your money. No worries, though; Patriot Federal Credit Union can help! Here’s how to start investing in five easy steps.

Step 1: Define your tolerance for risk 

If you’re investing, you’ll need to be prepared for the reality of potential losses. There is no such thing as a “sure thing.” But how much losing can you take?

Determining your risk tolerance is an important way to ensure you’re completely comfortable with your investment path. Your risk tolerance will likely vary according to your age and the time horizon you’re working toward; your risk capital, or the amount of money you can afford to lose; and your investment objectives, or what you hope to gain through your investments.

  1. Define your investment goals

Why are you investing this money? Do you hope to save enough money for a down payment? Are you trying to fund your retirement? Do you plan to use this money to pay for your child’s college education? Or, are you looking for a way to grow your money without any real plans for its ultimate use?

Identifying your investment goals will help you choose your investment vehicles and the amount of money you’re comfortable investing.

  1. Determine your investing style

Next, you’ll need to find an investing style that suits your personality and investing goals. Here are your basic choices:

  1. Choose your investment account

You’re ready to choose your investments! Here are some options to choose from:

  1. Learn to diversify and reduce risk

Once you’ve started investing, you’ll need to monitor and adjust your portfolio on a regular basis for optimal performance. Most importantly, you’ll want to make sure your portfolio is diversified, or that your funds are divided across different investments and classes. Diversifying helps reduce your risk of loss by ensuring that one poorly performing investment won’t bring down your entire portfolio.

Getting your feet wet in the world of investing can be super-exciting, but daunting. Follow the steps outlined here to get started

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