Those who are new to investing often experience a strong sense of trepidation and fear. After all, when your idea of “investing” involves crazed London Stock Exchange investors screaming to buy and sell, or memories of past stock market crashes, who wouldn’t be scared to invest?
These extremes don’t paint the real picture of what it’s like to invest, however. The typical investor is an everyday person who keeps a patient watch over the market. It’s also good to know that over the past eighty years, the stock market has returned an average of 9 percent on an annual basis.
If the thought of investing sends you into a panic, here are five steps to take to conquer your fear.
1. Education Is Everything
Human beings fear the unknown, and that includes investing. Before tucking your hard-earned cash away into different investment opportunities, read up on stocks, bonds, and mutual funds. Learn about several simple investment strategies and gain an understanding of what expenses and fees may be involved with different investment options. As you become more knowledgeable, you’ll feel increasingly confident in the investment decisions you make.
2. Set Small Reasonable Goals
Don’t leap headlong into the market. Start small while you’re learning and ease yourself into the process.
A good way to start is to take a small sum of money and invest that money into an account with less risk. As you gain confidence, you’ll feel more comfortable with investing larger sums of money, and as a result, enjoying larger profits.
3. Be Prepared to Wait
Often the long-term investments you make will turn out to be the most reliable. They will grow steadily over time with minor setbacks over the years, but once they mature (which may take a decade or two) you’ll be able to take advantage of strong and steady gains.
4. Understand That There Will Be Losses and Gains
Not every investment you make will work to your benefit, and several will result in solid capital gains. The important thing is to not be scared off from investing the first time you experience a loss. Take that opportunity to learn from the mistakes you made, brush yourself off and try something new.
5. Start Developing an Investment Strategy
As you move along your investment journey, you’ll start to notice trends in what generates the most profit, which types of investments work well for your goals, and which you actually enjoy investing in. Check out some examples of trading strategies, speak with investment experts, and start to piece together an investment plan to maximize your gains.
One piece of wisdom we like to impart to new investors is to explore every avenue. Traditional investments aren’t your only option anymore, with exciting and lucrative new opportunities opening up to the public faster than ever before.
Peer-to-peer (P2P) lending is one of the leading opportunities for investors to make the most out of their money. P2P lending matches lenders with borrowers through online services so that borrowers can build profitable businesses and lenders can enjoy a healthy portion of the shares.