Novice investors are often intimidated by the idea of investing their money, whether they choose stocks, bonds, or real estate. If you want to start investing but you’re afraid of the risk, you can definitely benefit from starting out small. In fact, it’s better to begin with a small amount of money, and not just for your peace of mind.
You Won’t Lose as Much Money
Image via Flickr by Casey Serin
If you decide to start out by investing a small amount of capital, you aren’t going to lose more than you can safely afford. In fact, you have a better opportunity to put a cap on the amount you initially invest. Lots of newbies have actually made their fortunes with a start-up investment of just a thousand dollars. That sounds like a lot to anyone who doesn’t have much money, but that’s the thing. If you’ve decided to start investing but know you want to start small, there’s absolutely no rush. Start saving now and you won’t lose anything.
You’ll Learn the Ins and Outs
Starting out small has another very important benefit: knowledge. No novice goes into investing knowing everything. In fact, the attitude that you know everything there to know is detrimental and dangerous. By starting small, spending just what you’re comfortable potentially losing, you’re more invested in your investment, so to speak. You want to learn about where your money is going and why it’s growing. That’s what makes you become an expert. You’ll learn about gains and losses, predictions and estimations, and that knowledge pays off later. In time, you’ll feel more confident and you’ll take risks that pay off more.
You Grow with Your Investment Manager
No matter how much money you have to invest, you need an investment manager. Look at any Fisher Investment Forbes advice or articles and you’ll see how important it is to have someone knowledgeable in your corner. Your financial wizard will help you grow—and he or she will help your investments grow as well. A good investment manager is willing to teach you so that you can then make decisions on your own. You’ll feel more comfortable making your own investment choices, but you’ll have someone to walk you through discussions about risks and steer you away from bad decisions.
You’ll Earn More Money
By starting out small, you’ll ultimately earn more money. How does that work? Solely because you are still invested in your money, where it goes, and what it does. You won’t get cocky or arrogant, you’ll understand the difference between good and bad risks, and you’ll always remember that first investment. Your choices will naturally be smarter, you’ll think over every new investment, and you’ll make sure you’re knowledgeable about every possible stock or bond. It’s better in the long run because it pays off more in the end.
Taking time to save up capital and think hard about your investments is simply better for you. Do you prefer to take huge risks or think things over before making a new investment?