How to start investing
For many people, investing can feel like an unsafe and expensive exercise that only high-income earners can afford. The reality is that investing doesn’t need to be expensive, and one can start investing with a small amount, in a safe way.
To get started, you first need to ask yourself these two important questions:
What am I investing for?
You need to decide on a goal you want to invest in; it could be anything from planning for your retirement, your kids’ education or building a house. Your investment goal needs to be something that you are willing to make a financial commitment towards over a specified period.
How long do I have to achieve my goal?
You need to determine how long it will take you to reach your investment goal.
There are different timeframes which are classified as short term (12 months or less), medium term (up to 5 years) and long term (longer than 5 years) goals. Your investment and the timeframe you have to achieve your goal, determines the level of risk you can tolerate (how much you can afford to lose) and which fund will best suit your needs.
Once you’ve answered the questions above, you then need to gather enough information to determine which investment plan works for you. There are three crucial tools you will need to ensure that you have made the right investment decision:
- Have an experienced and reputational fund manager that will give you professional advice and be there for you when you need help
- Make sure that your investment plan has reasonable and competitive fees
- Do your research, and make sure that you have full understanding of your chosen investment plan.
- Unit Trusts: A diversified, professionally managed portfolio of assets which is accessed by investing a modest amount of money.
- Tax-Free Investment: A savings plan that can be used for a variety of objectives such as retirement, education for your child and emergency savings.
- Retirement Annuity: A disciplined, long-term plan to supplement existing retirement savings.
How to get started?
Not everyone has a huge lump sum to invest so the easiest way is to start with a debit order facility.
Here are a few benefits from investing debit order via:
- Commitment – you can avoid spending your investment on unplanned expenditure because a consistent amount gets debited from your account at the end of every month.
- Your investment grows over time – small monthly contributions can grow into a big amount over a longer period.
- Risk of emotional investing is low – when you invest a lump sum, the timing of your investment has an impact on your return and when your emotions influence your timing, you are more likely to invest at the wrong time. A debit order allows you to buy at both good and bad times which help you to average out your investment.
“The best investment you can make, is an investment in yourself. The more you learn, the more you’ll earn” - Warren Buffett.