10 Basic Things About Investing That One Should Learn Early In Life


If you are almost 25 and still think saving and investing is not your cup of tea/coffee, or feel it's too early to think about retirement plans, then you let us tell you that you are going pretty wrong. Time is one of the biggest advantage young people have when it comes to investing, as you get plenty of time to learn from your mistakes. This is the time when you can afford to take calculated risks rather than later regretting living a mediocre life. If you want to become rich, start investing as there is no better way to make money. Don't believe me? Then do some research yourself about how rich people make money and why no becomes a billionaire working his whole life for someone else. 


1. Never invest money that you might need soon
Professionals suggest that you should not invest the money if you will need it back in the next five years. This is suggested because if the market goes down during this period you won't be left with enough time to recover those funds. 

2. You don't need to do it yourself

You don't need to become an expert in investing or mug up the whole Intelligent Investor by Benjamin Graham before you start investing. There are financial planners, wealth advisors and consultancies who can help you. 

3. Starting early gives you an edge over those who start late

Time is the biggest factor that plays a pivotal role while making money. The sooner you start investing, the more time you can give your money to take the advantage of the compound interest. Also, the sooner you investing, you give yourself more chances to get better with your strategies. 

4. Your long-term strategy must not be disturbed by every morning news

Stocks are very volatile in nature so most of the market experts never advise any investor to alter their investment as per the news on the TV. Why? Statistics show that buying and selling stock so frequently does not work for most of the people.

5. Many a times you will fail

We have all heard of the line that 'investments are subject to market risk.' And that is true and pretty fair as well. Stocks depend on many factors other than how the company itself is performing. No one gets rich without taking some calculated risk. In reality, you will fail sometimes as well. The thing is to learn from your mistakes and learn to play better.

6. You may have to pay taxes on your investments

The money you make with the help of your investment is not spared without being taxed by the government and you'll owe what's called capital gains taxes. Though there are other ways as well as retirement plan investments which may not need to pay tax to the government.

7. Most of the times you will be charged fees

If you are taking the help of an investment professional then you will probably have to pay him or her a flat fee or a percent share of your portfolio. If you are taking the help of a consultancy then also the same rule applies.

8. Bonds are loans you make

For an instance, when you purchase a bond you are actually loaning a sum of money to the government. Now, after some time that entity has to pay you back the amount with added interest on the money. 

Buying and selling bonds aren't that feasible in India as we don't have a marketplace like the US for bonds. You can do so by investing in Mutual Funds which deal in such instruments.

9. Stocks are equity in any company

When you buy a stock, suppose in a private company, you are actually buying a tiny part, in fact, a share of that company. You do not get ownership unless you hold a huge share in the company. Remember that stock is more often more volatile than bonds, and thus, they also yield high gains or steep losses.

Source - MensXP

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