Where To Start if You Don’t Have a Clue About Investing

Money is a confusing thing.

There are all kinds of approaches you can take when it comes to accruing wealth. Whether that’s making better choices with your savings plan, taking a look at your spending habits or choosing to invest your cash into something, there are a lot of options on hand, and they can get kind of daunting if you’re new to it all.

If investing is the route you’d like to go, you’re going to want to do some research to ensure you’re making informed choices. Chat to some industry experts, and get a few credible opinions before diving in if you’re unsure.

To start the education process off, I chatted with Gerry Incollingo, MD of LCI Partners about first-time investors and some common mistakes people tend to make.

Here’s what I learnt.

You need to do the groundwork before investing your money into something

Incollingo shared that it’s important to “understand that all investments come with risk”. However, to mitigate that risk, you need to take your time and make educated choices.

“Jumping in the deep end of investing with barely any knowledge on investing is a big no-no,” he said.

And yet, some of the more common mistakes he said he sees include “Not seeking financial advice, not understanding how investments work, not having a plan, and chasing performance without understanding how to manage risks”. Not great.

To best prepare for this learning curve you’re about to navigate, Incollingo said it is a good idea to develop an investment plan with some experts.

That way, “you can reduce your chances of losing big and be on your way to a secure financial future”.

He pointed out that books, podcasts and forums can be great resources in this space, but when you’re serious about investing, you should speak with a financial advisor.

Look into diversifying your investment portfolio

“There are many ways to invest, so pick the methods that suit you,” Incollingo said.

That may be property, or stocks and the sharemarket (Incollingo shared that it’s best to speak with an expert on stocks, first), or maybe even property bonds.

“Property bonds are essentially when you put money in to get a property development built. The bond becomes a legally binding agreement between the investor and property developer. They use the money to build the property and get a percentage return back. Both options generally allow you to take your money out anytime you like,” he explained.

There’s also the option to invest in businesses, long term interest accounts or if it suits you, superannuation.

The main thing here is that you “invest with a long-term goal in mind” and that you choose the option that is right for you.