- More people are starting to invest as individuals in the market.
- Non-professional investors jumped from 10% to 25% of total investors within a year.
- Here’s how you can join in to start investing now for a better tomorrow.
Are you an investor?
The idea of investing is becoming more popular. As a result, the number of non-professional investors or retail investors has also jumped significantly. Retail investors jumped from 10% of the market in 2019 to 25% in 2020.
Many of us feel like we can’t invest until we feel ready.
It’s more difficult to start investing if your parents didn’t invest and your friends don’t invest. Investing represents risk, and if you don’t see examples of investing, if the idea of markets going up and down at will is not normal for you, it can seem like gambling.
You can take steps to start investing and provide an example of an investor to those around you. Despite what we see in the popular media, you don’t need to be wealthy to start investing. By dipping your toe in the waters of investing, you are becoming an investor.
Here’s how you can start investing now:
1. Look at your current financial health
Investing is risky because the money you put towards an investment could change with the market. Insulate yourself from these shocks with an emergency fund in case you need to access cash quickly. You could also assess your financial fitness overall, including whether you are carrying debt. If you have high-interest debt, you might be better off paying this debt first before starting to invest, particularly if the interest you owe is more than the interest you will earn.
2. Have a plan for how you want to invest
Many of us start investing by trial and error. We pick up a few stocks that our friends recommend and don’t think our risk exposure. Instead, have a plan for how you want to invest that ensures you have enough diversity in your investments to protect yourself from risk. Take the time to learn more about why you’re investing, define what you want to invest in, and for how long you want to keep your investments. This way, you start investing with a plan.
3. Start a savings habit
To ensure you have money to invest regularly, you will need to start saving some of it. This could be setting up a budget that enables you to save part of your income, such as saving 20% of what you earn with the 50-30-20 budget. You can then direct that money to investments when you’ve saved a certain amount of trying micro-investing to invest more frequently.
4. You might already be an investor
Many of us are already investing through something we will need when we’re older: our retirement fund. That retirement fund is invested in the market and will similarly be earning interest. So make sure you take the time to sort out your super and take an interest in your retirement investments. Know where it is invested now so that it is growing in a way that will benefit future you.
5. Get clear on why investing matters to you
We live in an interconnected world, and your money is going towards particular causes, whether you think about it or not. Sustainability is fundamental to the survival of the planet, and more investors are integrating sustainability issues into their investing criteria. Investing takes time, and you will learn more about it as you go, including its downsides. Make sure that time in the market is going towards investments that will benefit the future society that future you will have to live in.
Investing enables you to build wealth over time.
Often your investments have the potential to earn more money in the market than you might from other means. If you want to start investing now for a better tomorrow, make sure you assess your financial health, make a plan and be meaningful about the investments you make.