While you can never guarantee that you will make money from it, building an investment portfolio is generally seen as a great way to generate wealth.
However, like anything, the more you understand about investing, the more likely you are to make successful decisions. Clearly, then, it’s important to try to educate yourself about the process as much as you can.
Specifically, you should focus on determining what options you have available, the main risks of investing, and how you can maximise your returns.
But how do you do that?
In this post, we’ll explore six tips you should embrace to really understand investing.
If you bear these pointers in mind, you will provide yourself with a good knowledge base on which to base your speculations.
1. Understand why you should invest
There are several reasons why a person might invest money, so it is worth taking the time to understand some of the main ones straight off the bat.
Overall, building an investment portfolio is a good way to grow your wealth. It also enables you to build a passive income stream, meet your financial goals, keep up with inflation, and potentially even provide you with some tax benefits.
Generally speaking, your motivation for investing will determine what kind of investments you will make.
2. Establish the different ways of investing
Knowing what investing is and understanding how to do it are two completely different things. Therefore, you should make an effort to familiarise yourself with your options.
Investments come in many forms, including real estate, commodities like gold or silver, your superannuation, and the backing of small businesses as angel investors or through crowdfunding.
Establish the different ways of investing – if you’re managing inherited assets, consider selling inherited shares with Share Sales Direct for a straightforward and efficient process to handle these types of investments, ensuring you maximize your returns.
However, when you mention the term, people most often think of the stock market. This usually involves buying equities or shares in companies, such as the Commonwealth Bank of Australia, in the hope that their value will increase over time and pay you regular dividends.
You can check out the CBA stock price here to get more of a feel for it.
When it comes to establishing the different ways of investing, it is a good idea to read as many books and reputable online resources as you can.
3. Enrol in an online course
If you are serious about investing, it is a good idea to enrol in an online course that will equip you with a detailed knowledge of the finer points of the process.
Several universities and educational institutions offer e-learning courses on various aspects of building an investment portfolio.
One useful course is ‘Investment Management’, which is offered by the University of Melbourne and Sydney as part of their Master of Finance and Master of Commerce programmes, respectively.
Additionally, FINSIA (Financial Services Institute of Australasia) offers one on ‘Investment Management Fundamentals’, while The ASX (Australian Securities Exchange) counts ‘Options Trading Strategies’ and ‘Investing in Shares’ among their many online modules.
The great thing about these courses is that they can be completed at your own convenience and at a pace that fits your current work schedule. They will also provide you with greater expertise, in-depth knowledge and a better understanding of the tactics you can use when investing.
4. Consult with a financial advisor
Another terrific way to understand investing is to talk to an experienced financial advisor.
They would be able to provide you with current and relevant guidance and advice based on your personal situation, financial goals, and willingness to take risk.
Make sure you choose a reputable, licensed advisor who is registered with ASIC (Australian Securities and Investments Commission) and has a good track record of success in assisting clients in meeting their investment objectives.
LinkedIn is a good starting point for finding someone near you, although make sure you look at their customer reviews on Google or Facebook and ask for referrals.
It’s worth also doing an online search for them to see what press coverage, if any, they have received.
You can also search for financial advisors in Sydney here.
5. Keep up to date with the news
Investments are a volatile and vibrant industry that constantly changes. So, to understand the most current market conditions, it is important to keep abreast of the latest developments and trends via the media.
Luckily, in Australia, you can draw upon numerous sources, including the Australian Securities Exchange (ASX), the Australian Broadcasting Corporation, the Australian Financial Review and the Australian Stock Report.
They will all provide you with the latest information you need to make informed decisions about adding to or shedding your portfolio.
6. Join investment groups or clubs
Lastly, it is a good idea to join an investment group or club to further your knowledge and widen your industry connections.
These entities tend to be attended by those who want to learn more about investing, exchange ideas and collaborate with other like-minded people.
They usually cover most aspects of investing, including the stock market, angel investments and property market.
Some notable institutions you can join include the Sydney Angels network, the Property Investors Council of Australia and the Australian Investors Association.
