The amount needed to start investing is subjective. One of the most common misconceptions about investments is that investments require a huge sum to start with. When the subject of investment is being tackled, people immediately think and relate it to investment gurus and business tycoons such as Warren Buffet, Donald Trump, and Bill Gates and the wealth that they have. Well, what most people fail to realize is that these people started small, in fact, so small, and made it grow.
So what does it really take to start investing? Not really much but there are some things that should be considered. Keep in mind that investments are all about growth thus is you invest your money the right way it will grow no matter how small it is. One typical example is Warren Buffet who bought Berkshire Hathaway shares at $11.50 and $11.375 way back in 1964 and made it grow to more than $110,000 per share in 2011. Buffet’s Berkshire Hathaway investment in 1964 grew by 967,000% in nearly 5 decades. So what are the things that should be considered in investments over the amount of money that should be invested?
1.) Time. Since investments is all about growth, growth needs time thus investments need time. It takes time for an investment to grow because it is being affected by several factors in the market. The stock market is a manifestation of the a certain economy is doing. The stock market constantly moves up and down on a short term basis but in the long run, it goes up. Investors never bother to mind the short term fluctuations of the market because they are looking at the potential of the market. They believe that despite the ups and downs, their investments will just appreciate in time.
2.) Timing. Timing is one thing that some investors overlook. Timing is very essential because it will give you a better entry to invest. For example, during the 2008 so called economic crash, waiting to fish at the bottom was a lot better than constantly investing while the market is going down. Timing is very important for two reasons. First, without timing, time spent on your investments going down is wasted and second, if you get in at the right time, your investments has a lot better potential and room for growth. Once again, it is evident in the stock market, mutual funds, and other financial assets. You can buy more shares or buy at a cheaper value if you have the right timing.
3.) Quality and reputation of investments. The truth is, even though the market is doing good, there will be some sectors that will lag. The key is pinpoint which sectors are doing well and invest in it. One great thing that investors have right now is the flexibility and choices that they have. Mutual funds is one great option for people who want to invest but is short in cash. In mutual funds, you can invest for a very minimum amount, let a professional fund manager handle your investments, and rest assured that your money is going to reputable companies and investments. Other than mutual funds, real estate and other financial assets are good options too. Once again, just be keen to observe which sectors are doing good and check the reputation of the firms handling your investments.
4.) Set goals for your investments. Elaborating it further, set realistic goals for your investments. Ideally, investments should perform just above the inflation rate for you to consider it successful. Lucky ones get two, three, or even fourfold in terms of their gains. However, not everybody gets so lucky that some get only 10% or 20% gain on their investments. Mathematically speaking, a 10% gain is already a good gain because it has already beaten inflation and it is way higher than the interest rates in banks. Mutual funds perform at a conservative 12% annually while some experienced individuals get more than 50% return on their investments through stocks. Winning investors who engage in other endeavors are happy with small gains after all the expenses and financial responsibilities. Take note that it is all about growth so if you see your money growing, you’re a successful investor.