The process of investing can be a bit overwhelming, especially if you are doing it for the first time in your life. So, there’s nothing wrong with taking help whenever needed and reading articles like these to lend you a hand.
If you are planning to make an investment as a novice, then you should remember these 5 questions to answer before you buy your first investment as they will guide you through the process with much more ease than you can think of.
- Are You Ready to Take Risks?
The first thing about an investment you need to remember is that most of them are not 100 percent safe. So, you should ask yourself whether you are ready to take risks and lose all your hard-earned money in one go (which is always a possibility). If you can’t take the risk, it’s better to invest only small amounts of money and that too in safe options like government bonds.
- Are You Eager to Learn?
One of the 5 questions to answer before you buy your first investment is whether you are eager to learn about the investment options you have chosen or not. You can invest in stock options you prefer to learn about and have an interest in. For instance, if you work in the steel sector, you can learn about the steel industry and invest in stocks of steel industry only. If you have a real interest in learning, your investment decisions would be smarter.
- Are You Easily Influenced?
When investing, you should learn to not being swayed easily by others. If you think that one investment option is good on one day and think that the other is better the other day because someone on the television is saying that then you won’t be able to let your money grow. So, make sure that you are not swayed by others while investing.
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- How Much Can You Afford to Invest?
Another crucial one among 5 questions to answer before you buy your first investment is how much you can afford to invest without sacrificing your essential lifestyle choices. Ideally, you should invest some part of your earnings be it 30 percent or 40 percent as an investment. You can use the rest of the earning to live peacefully now. Don’t be too enthusiastic about the future as you may ruin your present being stingy. Also, don’t invest so little that you barely survive during your retirement. Try to maintain a balance between the two.
- Can You Trust Your Instincts?
The last question among the 5 questions to answer before you buy your first investment is whether you can trust your instincts/gut feeling or not. You should always be able to trust your instincts and leave an investment opportunity if your gut says that it’s not right. Instincts and knowledge rarely clash but if they do, you should go with the former. If it doesn’t feel right, you shouldn’t put your money into it. Similarly, if your gut feeling says that an investment is worth it, you should invest in it. It doesn’t matter how small the amount is, what matters is whether you trust your instincts to risk losing your money or not. In most cases, you should.