10 Things Every First-Time Investor Should Know

If you're like most people, you know investing money is a smart idea. But if you haven't gotten started because you think investing is too complicated or risky, it's time to learn how to invest without taking too much risk.

This episode will cover why it's essential to start investing as soon as possible and the different types of investments to choose from. You'll learn how to create the best investment strategy based on your financial situation, age, and risk tolerance.

Let's get into the details of how to be a successful investor.

Tip #1: Saving and investing are not the same

Before diving into what to know about investing, it's important to clarify that saving and investing are not the same. Saving is putting money into safe, low-yield accounts such as a bank savings account, money market account, or certificate of deposit (CD), so you preserve it.

Saving is the right move when you have short-term goals, such as buying a car or taking a vacation within a year or two. It's also appropriate for your emergency fund because it keeps your money completely safe. You know your cash reserve will be there when you need it.

However, investing is the right strategy for longer-term goals that you want to achieve in at least three to five years. They might include buying a home, paying for a child's college, and, of course, retiring. 

Investing requires some amount of risk, but without it, you aren't likely to earn enough growth to achieve significant financial goals, such as retiring.

With investing, you put money into financial instruments, such as stocks, bonds, or mutual funds, with the expectation of future growth. By using a buy-and-hold investing strategy, you increase potential returns over a long period. Investing isn't appropriate for short-term goals because market values can fluctuate wildly over a short period.

Investing requires some amount of risk, but without it, you aren't likely to earn enough growth to achieve significant financial goals, such as retiring. A good rule of thumb is to invest a minimum of 10% to 15% of your gross income for retirement every year.

Tip #2: Build financial safety nets before investing

While it's wise to begin investing as soon as possible, everyone's situation is different. First, clear up any dangerous debts, such as overdue taxes, child support, or...

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