The Basics of Investing
Austin Carroll is a financial advisor at Cornerstone based in Reno, NV. Austin has passed his Series 65 Securities Registration Examination. He helps clients create customized financial plans based on their unique financial goals by addressing topics such as income, investments, and taxes.
THE BASICS OF INVESTING
KEY POINTS TO HELP YOU JUMP-START FINANCIAL SUCCESS
Have you ever found yourself wondering how some people manage to grow their wealth over time without any magic money tree behind their house? Well, they have likely discovered the power of investing and have built a base understanding of what investing is and how to use it to their advantage. Whether you are just beginning your investment journey or have been saving for years without any real direction, understanding the basics of investing can and will help you achieve your financial independence and reach your retirement goals.
1. UNDERSTANDING WHAT INVESTING IS
Investing is using money to purchase something that offers the potential of returns via interest, income, or appreciation. That’s it, it's not gambling, although the stock market sometimes feels like a casino. It's about calculating risks, studying trends, and making an informed decision. So, whether you're saving for your retirement or your kids' college education, investing can be your best friend in reaching your financial goals.
2. SETTING INVESTMENT GOALS
Like any other life journey, you need to know where you are heading with your investments. What are you saving for? A vacation to Tahiti? Funding your child’s education? Planning for retirement? Identifying your investment goal can help you decide how much you need to save and choose the right investment path.
3. RISK TOLERANCE
Investing always comes with a degree of risk. Even cash has its risks. The general rule of thumb is that the higher the risk, the higher the possible return—and vice versa. Being in the younger bracket, 20s-30s, you may be able to afford to ride out the highs and lows of riskier investments. As you approach the retirement years though, you may want to shift your focus to safer, more secure investments.
4. DIVERSIFICATION
There is an old saying, “Never put all your eggs in one basket.” Never heard of this before? Well, the saying is about making sure that if the basket falls, not all your eggs break. This applies to investing as well. If you spread your investments across various types of assets from stocks and bonds to real estate, you could lessen the chance of losing all your savings if one investment goes south.
5. POWER OF COMPOUND INTEREST
Compound interest is the interest you earn not only on your initial investment but also on any interest you have previously earned. Think of it as the Charlie Brown snowball rolling across the ground growing larger and larger. The earlier you start investing, the more time you give your money to grow through the magic of compounding.
6. SEEK PROFESSIONAL ADVICE
Investing can be confusing, and it’s ok to seek help from a financial professional. They can provide informed advice, answer questions, and help you devise a solid game plan. Investing isn’t a get-rich-quick scheme - it’s a journey. If you ever feel overwhelmed, remember, every expert was once a beginner.
To see how Cornerstone can help you with your investment journey, give us a call at (775)853-9033.
This information should also not be considered tax or legal advice. Individuals should consult with a professional specializing in the fields of tax, legal, and accounting regarding the applicability of this information for their situation.