Getting Started With Investing
The Investors Centre is when you use your money to buy assets, such as shares or bonds, that you hope will increase in value over time. You may also earn interest from these investments, which is known as compounding. It’s an important way to save for a financial goal, such as retirement or a child’s college tuition.
Getting started with investing requires a clear-eyed assessment of your current financial situation and needs. First, make sure you have an emergency savings fund that can cover three to six months of living expenses. And have you paid down any high-cost debt? Then look at your income sources and consider how much you can set aside each month for investment purposes. Then find a service that fits your needs, such as a low-fee automated investment platform or a discount brokerage.
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Before you invest, it’s important to understand your risk tolerance Tooltip, or your appetite for loss, and your investment goals and timeline (also called your time horizon). The amount of money you choose to invest will likely be driven by these factors, as well as your own personal values and lifestyle.
It’s also a good idea to diversify your investments across asset categories, such as stocks, bonds and cash. This helps reduce the overall risk of losing your investment, because historically the returns of each asset category have not moved up and down together.