However, that’s only scratching the surface of it. Investing isn’t as simple as that. It’s not only a financial responsibility, it’s also a financial risk. In this article, we’ll be covering what you need to be an investor and what you can do to be successful.
Obtain Your Bachelor’s Degree
Although you might be thinking getting a college degree isn’t necessary when it comes to investing, it can certainly prepare you for what’s to come. The information that a college program provides you with can give you the insight as well as necessary skills every investor should have.
The degree you want to pursue should be in a field relating to finances. It can be business administration, finance or economics. A BA in finances usually costs somewhere around $30,000 to almost $80,000. You can easily pay for this by taking out a student loan.
A student loan is what covers everything relating to your academic needs and only those needs. You can use it for school supplies, textbooks, or a computer if you need a new one.
Choose an Investment Method
Investing isn’t just dealing with stocks. You can invest your money into a lot of things. However, each form of investment is different and comes with its own way of doing things.
Some aren’t as simple as routinely checking the stock market. Read a stock investors guide thoroughly before throwing your hat in the ring blindly. Below is a list of investments you can choose to participate in:
- High-yield savings accounts
- Certifications of deposit
- Exchange-traded funds
- Mutual funds
There are more options, but the ones listed here are among the best ones to choose from. Granted, there’s also a fair share of risk involved as well. Bonds can become junk bonds, which come with a very high interest rate. Commodities, like gold for instance, run the risk of not being too valuable. You must research the potential risks of the investment you choose.
Understand the Types of Risk
It’s very important that you study the various forms of risk you need to look out for. In the investment world, risk basically means what could potentially affect your finances in a negative way. Here’s a quick list of all the types of risk:
- Interest rate
Knowing what risks are involved can help you strategize and make better decisions. Market risk is the potential situation of your assets declining in value due to change or an event that transpires in the market, like a stock market crash.
Another example would be a liquidity risk. Liquidity is the term used to define how easy it is to convert an invested asset into cash. You want what you invest in to be as liquid as possible.
An example of something that’s not very liquid are penny stocks. Penny stocks cost as little as $1 to as much as $5 and are used in day trading. Because of how cheap these stocks are, they have very little value.