Mutual funds, stocks, bonds, high-yield
accounts, stock splits.all the financial jargon
that surrounds investing can give you a headache
and make you think that you'll never get there,
right? Wrong! Don't get bamboozled by all the
dense financial language. It's just language, and
if you end up wanting to invest in those areas,
you'll have time to research those areas
thoroughly before you invest.
That's the beauty of starting small-it gives
you time to do research, plus it probably fits
into your budget a lot better than a huge cash
outlay. Starting small is another top wealth
creating habit-and anyone can do it! So how do you
start small for investing? Here are a few simple
rules of thumb (some of which we covered in a
previous article about saving small) to get you
started:
- Save Small Amounts Steadily. Most of us don't
have a lot of available cash to invest, but we
probably can save $15-$75 dollars a month. Even
these small amounts are enough to get you started.
Never underestimate the power of small amounts!
Remember that Albert Einstein once called compound
interest mankind's greatest invention and the 8th
wonder of the world. Compound interest in anything
turns small amounts in large ones.
- Research While You're Saving. Since small
amounts can take a while to build up, this gives
you time to research where you'd like to
eventually invest your money. Do stocks and bonds
appeal to you? Mutual funds? Collectible items on
eBay? Classic cars? Baseball cards or stamps? Real
estate? Whatever, your fancy, start doing the
research now. Find out what all the jargon means,
how it's done, what the risks are, what the
initial monetary requirements are. You can find
out a lot by reading books, researching on the
Internet and talking to experts. It should be an
area that fascinates or interests you, meets your
acceptable risk limits, and doesn't require a huge
up-front investment.
- Experiment While You Save. Once you've done
the basic research, set aside a small portion of
your savings (if possible in your area of
interest) and experiment with it. For instance, if
you want to buy and sell stamps, invest that
portion of your savings into a few stamps.
Research them, buy them, hold them for a while (if
that fits into your investment strategy) and then
sell them. You'll learn a lot more this way than
you would just reading books.
- Develop Investment Goals. Once you've done
some research and experimentation, you'll have a
pretty good idea of what's possible in terms of
return on investment. Based on this information,
develop some solid financial goals for yourself.
These goals should include the amounts you want to
save each month, how you want to invest your
savings, and what kinds of returns and risks you
expect from your investment. Having a concrete
financial destination in mind will help you stay
on track when you're tempted to buy that hot new
plasma TV.
- Get a Mentor. There's nothing like standing
on someone else's shoulders when you're just
getting started. Find yourself a mentor, someone
who is already successful in the field in which
you want to invest. Most of these people had
mentors, too, and will be happy to help you
provided you're a good listener and apply what
they teach you. Don't know where to start looking?
You'd be surprised. A friend of a friend may be an
expert in stamp collecting and sales. You never
knew that because you never asked! Start asking
and the Universe will bring you a mentor. When the
student is ready.the teacher appears!
We hope that these wealth creating habits help
you begin your journey to fun, adventurous and
prosperous investing. Remember that investing does
not have to be traditional. Anything that
increases in value over time (or to which you can
add value and resell) is an investment. Anything
which gives you more money in return than you put
in is considered an investment. Sometimes the best
investing isn't where your head is, it's where
your heart is-in something that you're passionate
about. We know a lady who loves horses. She
doesn't ride them anymore (being over 60 years
old), but she loves to hang around them and she
knows a lot about them. She invests her money in
horses. She buys one horse a year, puts it in
training with an excellent trainer, and sells it
at the end of the year, usually for 10-30 times
what she paid for it (remember expenses are high
for horses). It's not a traditional route to
investing, but it works for her and she loves
it!
