Investing is among the distinctive methods for both expanding your finances and protecting your assets. By putting money into investments, individuals can earn profits and acquire stakes in businesses that may serve as financial security when unexpected events demand a lump sum of cash.

Additionally, making investments is an excellent strategy to allow idle funds to grow; essentially, this money increases over time with minimal effort, providing valuable passive income for the investor.

Nonetheless, the idea of putting money into investments is equally constrained by its primary element: risk. It might appear as though making such financial moves demands unwavering determination, insight, and bravery; however, dispelling all the misconceptions around it could potentially be achieved through understanding its underlying principles. To decide whether plunging capital into particular assets makes sense despite the associated risks, investors depend heavily on their expertise and decision-making skills.

That’s partly why certain individuals hesitate to invest—they fear losing funds without assurance of recouping them. Nevertheless, one of the appealing aspects of investing lies in how it challenges established patterns and unpredictability. Even unconventional start-ups and innovative technologies are upending traditional business practices. This element makes investment potentially gratifying when these changes occur.

Newcomers might feel daunted when starting out in investing, yet they ought to remember that investing isn’t based on chance. Instead, it’s about employing strategy and thoughtful consideration, along with making smart choices that can turn investing into a profitable pursuit.

Based on insights from Ritchie Teo, the Chief Investment Officer at Sun Life Investment Management and Trust Corp., here are five key pieces of advice for newcomers who are contemplating investment in assets. These guidelines can also aid novice investors in managing risks and planning their finances effectively.

Understand the fundamentals of investing

Initially, avoid entering an investment without careful consideration. According to Teo, this is the crucial point that newcomers must remember as it will provide them with insight into whether an asset deserves their investment or not.

Having knowledge isn’t just about understanding the specific asset you’re investing in; it’s also about grasping the market trends that could influence whether your asset increases or decreases in value. This insight ultimately dictates what kind of returns an investor will see.

Prospective investors ought to familiarize themselves with basic investing concepts including the terminology utilized in investments, the distinctions between various types of assets, and effective money management strategies.

“Get acquainted with the fundamentals of the funds or assets you plan to invest in. You can read books, find a mentor, or join webinars on investing. Gaining this knowledge will assist you in accurately assessing your risk tolerance,” according to Teo.

Always be thorough in your research to enhance your comprehension.

The initial advice ties into the subsequent suggestion, which emphasizes conducting thorough research every time an investor enters a fresh venture. Frequently, because of accessible communication channels and platforms like social media, individuals can be swayed to put their money into ventures without fully grasping them. Consequently, this heightens the chance of financial loss.

As per Teo, this constitutes a significant error often committed by beginner investors. Out of concern about being left behind, these individuals hastily put their funds into an endeavor without thorough examination. If such an investment does not succeed, it could deter them from investing once more.

“Always remember that some individuals may showcase their achievements on social platforms. Avoid getting lured into following them recklessly out of FOMO—fear of missing out. Ensure you conduct thorough research as ultimately, you alone bear the brunt of any setbacks. The consequences aren’t shared,” notes Teo.

Ensure your investments align with your tolerance for risk.

Use the sleep mark examination to confirm that the risk can be controlled effectively.

“If contemplating your upcoming investment keeps you from sleeping well, it signifies that you’re assuming too much risk. You might want to reduce the investment sum or opt for less risky options like fixed-income investments to better align with your risk appetite,” Teo clarified.

After novice investors gain knowledge and confidence regarding the details and potential hazards of their investments, it’s time to turn this preparedness into practice. According to Teo, those just starting out with modest budgets ought to consider investing in diversified funds that have minimal entry requirements and easy access points. Doing so can aid them in constructing a robust investment portfolio.

Discover ways to handle both victories and defeats

Investing is truly an uncertain endeavor due to the fluctuations in market trends, economic conditions, and various societal influences. Success is not guaranteed every time; hence, it’s crucial for novice investors to acknowledge potential losses and view them as opportunities for growth and education.

“Nobody will consistently win every trade they make. The key is learning from each transaction you engage in. With increased experience, your tolerance for risk and mental fortitude will naturally develop,” asserts Teo.

Investing can be both an enriching and daunting endeavor, yet it doesn’t necessarily harm your psychological or economic well-being. Armed with proper understanding, suitable tolerance for risks, commitment, and hard work, these opportunities could free you from monetary troubles and grant a feeling of triumph over life’s hurdles.

Begin investing at the earliest opportunity possible.

Starting investments at an earlier stage provides multiple advantages that can shape someone’s financial journey. When people invest sooner rather than later, they allow their funds additional time to grow through compounding, which may result in significantly higher earnings.

Moreover, beginning early allows you to capitalize on market ups and downs and bounce back from potential losses, thus minimizing total risk. It also fosters consistent saving practices and fiscal discipline, establishing a solid base for accumulating substantial wealth over time.

Want to get started on your investment journey? Learn more about Sun Life Investment Management and Trust Corp.’s products and services by visiting
www.sunlife.co/SLIMTC