5 Effective Investment Strategies for Newbies

Even if you’re a total investment newbie, you can still make smart investment choices just by following these tried-and-tested tips from successful investors. By Mai Bantog

Investment strategies for newbies
Even if you’re a total investment newbie, you can still make smart investment choices

Planning to start investing soon? Starting your investment journey can feel exciting yet unnerving at the same time. At the back of your mind, there’s always that nagging thought that you might lose money in the process.

But even if you’re a total investment newbie, you can still make smart investment choices just by learning from investors who came before you. After all, they’ve grown their money by following some basic investment principles.

Check out these tried and tested tips that successful investors have used over the years:

Research.
Before putting your money anywhere, it’s important to do your homework first and learn about your different investment options.

Depending on your risk tolerance, you may invest in bonds, mutual funds, the stock market, or real estate. You may also open your own business or franchise one.

But whatever you decide, make sure that you read about it first.

For instance, if you’ve chosen to invest in the stock market, read about the companies that you’re eyeing to invest in. Look at their growth, services, earnings, debts, cash flow, and management system. It shouldn’t be hard to look for information because publicly traded companies are mandated to share such information.

Since you’re just starting, don’t hesitate to seek expert advice from financial advisors, brokers, and mutual fund managers.

Remember, never enter an investment that you don’t understand.

Start now.
As many investors say, the best time to start investing is yesterday. The next best time is now.

That’s because time is of the essence when it comes to investing. A person who starts investing now at P5,000 a month will yield a higher amount in 40 years than someone who will only start ten years later, even at a higher amount.

The longer your timeline is, the more your money grows and the better your investment will be once it matures.

READ: How the 80/20 Rule Can Turn Around Your Finances

Be consistent.
No matter how small your monthly contributions are, be consistent in putting them in your investment fund.

Don’t wait to get a better paying job before you start investing. Start small by making sure that you invest a certain amount or percentage of your paycheck as those will add up in the long run.

If you keep forgetting to do this, automate your investments through your bank account or broker. Soon enough, it will become second nature to you, and you’ll be able to form a habit.

And once you increase your cash flow, make sure to increase your investment contributions as well.

Stay diversified.
Any investment carries a certain risk—some more than others.

But by investing in multiple companies and assets, you’re significantly lessening your investment risk and improving your gains.

Your business may be earning now, but who’s to say it’s going to last for another ten years? Better open a stock market account so that you can also invest in blue chip companies that are still around even during economic downturns.

You may also want to venture into real estate, like investing in a house and lot in a growing area like Nuvali. Because it’s poised for growth, it puts you in a prime position to take advantage of its high rental yields and value in the future.

As the adage goes, “Don’t put all your eggs in one basket.”

READ: Here’s How You Save Money When You Own a Condo

Beat inflation.
Your investment will only grow in value if you beat the inflation rate, which is the rate of change in price level over time. If your investment only gives you 3% interest every year but the inflation rate is at 6%, then you’re losing money as time goes by.

Simply putting your money in a savings account doesn’t count as an investment. Make sure that you invest in something that yields a higher interest than the inflation rate, such as mutual funds and stocks. This ensures that your money is growing over time, not diminishing in value.

You can also beat inflation when you invest in a house and lot in a growing area like Nuvali, as the price of land increases over time.

Just follow these proven effective investment strategies, and you’ll be able to start off your investment journey on the right foot. Consider investing in high-yield vehicles like condominium properties, which you can rent out to tenants and become a source of passive income.