How should you get started with investing?
It might not be the first thing that comes to mind when you think about planning for your retirement, but this is definitely a question you should be asking.
But before you even start thinking about specific investment vehicles, know that investing offers no guarantees — it’s inherently risky.
Just like with gambling, you should never invest any money you aren’t willing to lose. The market historically trends upward, but you can’t rely on that. And, as we’ve seen in 2022, changes in individual stocks or the market as a whole can negatively impact your retirement funds. But for those who have money they’re willing to part with and who understand their risk tolerance, long-term investing can provide growth opportunities for your retirement savings and help you reach your goals.
Watch the video below for part 4 of the Question Mark series on retirement planning.
So, you’ve decided to start to invest. Great step.
Number one, I’ll ask you, how risky are you? The first fundamental question you should ask yourself about saving or investing at all is how much are you willing to lose?
And the reason I ask you that is because there are many vehicles that you can put your money into. Some of them are very risky, meaning that if you put your money into them, you might lose it all. And some of them are very, very safe. But that risk reward also determines oftentimes the return. The riskier you are with your money; you may be able to get a much higher return. However, you’re risking more.
So, the number one fundamental rule is understanding your risk tolerance. How much are you willing to lose? Start there. Then we’ll start talking about the vehicles where we should put our money.
For more answers to common retirement planning questions, check out the rest of the Question Mark: Retirement Planning series.