As a beginner, managing finances is crucial for making informed decisions about investing.
This includes allocating assets or capital into investment products based on the desired investment period.
Investing can help individuals achieve a variety of financial goals, such as saving for a vacation, purchasing a vehicle, preparing for a down payment on a home or apartment, covering wedding expenses, paying for children's education, or building retirement funds.
For those who may be unsure of where to begin, this guide provides tips for beginners to start their investment journey with confidence.
1. Set Investment Goals
Establishing investment goals is a crucial step before making any investments. This includes setting clear and specific objectives, such as building an emergency fund, planning a family vacation, saving for a wedding, purchasing a personal vehicle, or covering the expenses for a parent's pilgrimage.
Having defined investment goals helps to keep motivation high, ensure consistency in investing, and provide direction for allocating funds.
Without well-defined goals, it can be challenging to stay committed to achieving them and understanding the purpose of investing.
2. Estimate Investment Fund Allocation
Once investment goals are established, it's important to consider the allocation of investment funds and the necessary time frame to achieve these goals.
This includes taking into account the current amount of funds available and estimating the length of time for the investment.
For example, if the goal is to save for a 2 million down payment on a house to be purchased in three years, the current funds available would need to be calculated and the necessary allocation of funds determined to reach the goal within the set time frame.
3. Adjust Investment with Risk Profile
Beginners should align their investment objectives and period with their risk tolerance.
Low-risk investors who prefer to invest in mutual funds may opt for money market funds, which are a suitable choice for short-term investments such as emergency funds or investments spanning 1-2 years.
Long-term, high-risk investors may choose stock mutual funds, which offer potentially higher returns over a period of 5-10 years.
On the other hand, moderate investors who plan to invest in the medium to long term can consider fixed-income or mixed funds.
4. Invest Routinely Every Month
Many novice investors rely on their monthly income to reach their future financial goals.
A key aspect of successful investing is to consistently set aside a portion of one's income for investments.
By adjusting to one's financial situation, it is possible to meet daily needs while still making regular investments.
Creating a monthly routine for investing, regardless of the amount, is also beneficial.
For example, if one receives their salary at the beginning of the month, it can be beneficial to make a habit of investing at the beginning of the month as well. This way, one does not need to wait for the remaining money to invest.
By making investment a priority expenditure when receiving a salary, by regularly investing, one can reach their aspirations and gain financial freedom in the future.
5. Enriching Knowledge About Investment
For beginner investors, expanding their knowledge of investment is crucial. This includes gaining a foundational understanding of investment concepts.
The modern digital age offers many resources, such as social media platforms, that provide information and tips on various investment products.
Joining online investing communities also allows investors to learn from others and exchange knowledge.
These resources can provide valuable information and assist in managing investment portfolios effectively.