A Beginner’s Guide to Investing

June 25, 2024

By Christopher Sassone, CFP®, CLTC®, Financial Consultant Investment Advisor

Maybe you have saved money over the years and now you’re thinking about investing it. But taking that first step can feel daunting, especially when the financial world seems so unpredictable. Yet, making smart investments can be crucial for achieving your long-term financial goals.

Unfortunately, there’s also a common misconception that investing is only for financial wizards or the ultra-wealthy. The truth is, it’s all about education, strategic planning and sticking to your strategy.

At Davie Kaplan, we have helped people manage their investments for decades. Here’s our advice on how to get started:

  1. Research the Basics: Spend some time learning the basics of investing, including different asset classes like stocks, bonds, mutual funds, and ETFs. There are plenty of credible resources out there to help you build a solid understanding.
  2. Set Clear Goals and Timelines: Define your investment goals, whether it’s saving for retirement, buying a house, or funding your children’s education. Clear goals will guide your strategy and keep you focused.
  3. Assess Risk Tolerance: Understand how comfortable you are with market fluctuations and potential losses. Your risk tolerance will influence your investment decisions, so take the time to evaluate it carefully.
  4. Understand Investment Products: Let’s explore the distinct types of investment products available:
    • Stocks: These represent ownership shares in corporations and are traded on exchanges like the New York Stock Exchange (NYSE). They offer investors the chance to take part in the growth of individual companies or diversified global portfolios.
    • Bonds: Bonds represent debt issued by companies or governments to raise money. Investors receive a promised return in the form of interest, making bonds a popular choice for those seeking steady income.
    • Cash and Cash Alternatives: Cash investments, also known as money market investments, are often considered the least risky of the three types. While they offer liquidity, they typically produce lower returns over the long run.
    • Mutual Funds: These pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets. They provide market diversity with a modest investment amount, making them popular vehicles for retirement and education planning.
    • By diversifying your portfolio across these different investment products, you can spread your risk and potentially increase your chances of achieving your financial goals.
    • Start With a Comfortable Amount: You don’t need a hefty sum of money to start investing. Begin with an amount you’re comfortable with and gradually increase your investments over time.
  1. Consider Tax Implications: Be mindful of the tax implications of your investments and withdrawals, while taking advantage of tax-advantaged accounts whenever possible. Choosing a financial firm that combines wealth management ability with tax knowledge can be crucial here.
  2. Stay Informed: Keep yourself updated on market trends and economic news, but don’t let short-term fluctuations derail your long-term strategy. It’s essential to adopt a disciplined approach focused on the long term.
  3. Seek Professional Advice: Consult with a financial professional to create a personalized investment plan tailored to your goals and circumstances. They can offer valuable insights and guidance to help you navigate the complexities of the market.

Before investing, you and your financial professional will work together to outline and prioritize your financial goals, assess your current financial standing, pay off high-interest debt, set up an emergency fund, create a budget to manage expenses, prioritize saving for yourself or your family, and find opportunities to reduce expenses.

Ready to start your investing journey? Reach out to us today. At Davie Kaplan, our wealth advisors and certified public accountants work together to evaluate every possible opportunity to reach your financial goals. Contact us to learn more about our team approach and how to start putting your money to work for you.

Diversification does not assure or guarantee better performance/profit and cannot eliminate the risk of investment losses in declining markets. Bonds are subject to interest rate risk. When interest rates rise, bond prices usually fall. The effect is usually more pronounced for longer-term securities. Fixed-income securities also carry inflation risk and credit and default risks for both issuers and counterparties. You may have a gain or loss if you sell a bond before its maturity date. Before investing in mutual funds or ETFs, investors should consider a fund’s investment objectives, risks, charges, and expenses. Contact your financial advisor for a prospectus containing this information. Please read it carefully before investing. Investing: Investing involves risk, including the possible loss of the money you invest.

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