The internet and the vast amount of information available at our finger tips these days is inspiring more and more individuals to learn how to DIY (Do It Yourself) a number of tasks that may have seemed too complicated in previous years – including investing.
DIY investing is when regular, everyday people, take control of their finances and start handling their own investment decisions. DIY investing can save investors on fees and gives them the independence to make their own decisions based upon what’s important to them.
If you’ve decided to tackle investing on your own, here are 3 things you can do to get started on your DIY journey.
Understand Risk & Your Risk Tolerance
It is vital to understand the risks associated with the different types of investments as well as knowing your own risk tolerance when choosing investments that will be right for you.
When investing, risk is determined by the potential loss of money that could occur. Typically, the greater the risk, the greater the return and vice versa. Your risk tolerance is your attitude and willingness to lose money. You’ll need to ask yourself how you would feel if you lost it all. If you fear losing, you’ll want to invest in lower risk options. If losing doesn’t scare you, you may want to opt for something that is considered higher risk.
Understanding the risks involved and aligning them with your personal risk tolerance can help you put together a strategy that balances your desires and any possible worries.
Outline your Financial Objectives and Set Goals
Once you understand risk and know your risk tolerance, it’s important to set financial objectives and goals. These are the reasons you want to invest. Some would say they are the most important part of investing. They may include things like saving for a down payment, paying for your child’s college, a vacation, or retirement and should be your motivation for investing.
What’s my purpose for investing?
How much time do I have?
How would I like my money to grow?
What risk am I willing to take?
Think of your objectives and goals as your destination – you’ll need to know where you’re going to actually get there (and be on time).
Know Your Investment Options
Investing is very personal – there’s not one investment or plan that is right for everyone,; however, some are better than others based upon individual objectives, goals, and risk tolerance.
Financial advisors are paid a lot of money to know the ins and outs of investing and to create tailored plans that meet their client’s needs. Although you won’t need to have as much experience as they do to invest yourself, you will need to be familiar with the different types of investments out there along with some basic investing know how to be successful.
You’ll need to do some research on available options including stocks, bonds, mutual funds, real estate, precious metals, etc. You’ll want to look at their historical returns, any fees involved, and of course, the risk. It’s important to stay up to date, as things change constantly when it comes to investing.
Not sure if DIY Investing is right for you yet? Take the Veteran Saves Pledge today and choose Investment Savings as your goal. We’ll be your partner and will send you texts and emails full of tips and resources to help get you started and keep you motivated along the way.