8 Simple Investing Tips That Helped Me Start Building Wealth

Investing is key to building your wealth and achieving financial freedom.

The truth though, is that the world of investing can be a daunting place for beginners, which can cause:

• You to lose money.

• You to be put off altogether.

We’ve all been there.

That’s why I’ve compiled a list of 8 beginner investing tips that helped me start building real wealth through investing.

Start Small, And Learn As You Go

The best way to navigate the world of investing is to experience it yourself.

But, when you’re a beginner, you’ll make mistakes, and possibly even lose money.

So, that’s why I recommend you to start with small portions of money.

Money which you’re willing to lose for the sake of learning the fundamentals of investing.

These investing mistakes are necessary to get out of your system early, before you become more confident, more savvy, and start investing larger sums of money.

Diversify As Your Portfolio Increases

After time, it’s wise to ensure your portfolio is diversified by asset class:

• Stocks

• Real Estate

• Cryptocurrency

• ETFs

And also by industry:

• Finance

• Automobiles

• Technology

• Pharmaceuticals

This way, any individual losses won’t have a serious impact on your overall portfolio, as you can offset any losses with the gains of other investments.

Aside from when you’re just starting, investing into only a handful of assets can be risky, as any losses can have a significant impact on your portfolio.

My rule of thumb is to never have more than 10% of my portfolio in a single investment, except for any broad market funds like the S&P 500.

Don’t Invest With Emotion

Fear and greed are strong emotions in investing, especially if you’re a beginner and have failed to master the art of investing without emotion.

You’ll soon realise that investing is much more psychological and emotional than you think.

1. When prices are going up, you expect them to continue to do so.

2. When prices are going down, you expect them… to continue to do so.

So, emotional investors end up doing two things:

1. Buying when prices are too high.

2. Selling when prices are too low.

Which is the very opposite of what you should be doing.

So, remove all emotion when it comes to investing, as there’s a great chance it will only end up damaging your returns.

Prioritise Efficiency, Not Return

Getting the best return is something that seems like the obvious aim, right?

Well, tell me which one of these people is actually getting the best bang for their buck:

• Person 1–15% annual return by spending 10 hours a week researching stocks.

• Person 2–10% annual return, but spends 0 hours per week looking at stocks.

I don’t know about you, but I’m taking Person 2 every day of the week.

Investing isn’t always about getting the best return. It’s about opportunity cost.

Time is money, so ask yourself, would the time you’d spend researching investments be better spent elsewhere, like starting a business?

Use Tax-Advantaged Accounts

You’ll need to go off and do a bit of research yourself depending on your region, but most countries will offer specific accounts which will give you huge tax advantages.

In my case, in the UK, you can open a Stocks & Shares ISA which enables you to invest £20k each year, completely tax free.

It’s an account less than 10% of adults have, but the benefits are huge.

So, take a few minutes to gain some knowledge on what tax-advantaged accounts are available to you.

Only Invest What You’re Comfortable With

Investing can become a scary place when you’re overleveraged.

In other words, you’ve got more money in the market than you’re comfortable with.

We all have our own levels of risk tolerance. Just because someone:

• A friend

• Colleague

• Family member

Has more money invested than you, that doesn’t mean it’s good for you to also do the same.

It’s not a competition!

Only stick with what you’re comfortable with, so you can enjoy the peace of mind that comes with sensible investing.

Invest for Decades, Not for Days

It’s cliche, but it’s the most important thing you need to adjust to when you’re investing.

As sad as this is, you’re not going to become a multi-millionaire overnight but investing a few hundred dollars in the stock market.

It’s a long term game, and in truth, the longer you plan on playing said game, the better the rewards will be.

So, plan in decades, not in days, because investing isn’t some passing fad.

It’s for life.

Don’t Invest Based On Recommendations

Probably the one mistake I’ve rued the most over my years of investing.

I used to do this all the time, because I would let FOMO distract me from the fact that the people I was listening to probably didn’t have my best interests aligned with theirs.

When investing your money, you always have to do your own research on what you’re investing in.

You can of course take the advice from someone else, but make sure you back it up with your own knowledge and information, rather than just their opinion and nothing else.

This is especially common in crypto investing.

When you see an influencer with millions of followers shilling a coin, you don’t think anything can go wrong…

Until you realise they’re been paid to advertise a project, only for it to goo bust… because it sucks… and you’ve lost your money.

So, like they say… DYOR (Do Your Own Research)

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