Home' Trinidad and Tobago Guardian : December 7th 2014 Contents SBG16 FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 7 • 2014
Investing can be overwhelming when you are
starting out. But learning to grow your wealth
through investments is a skill that can propel
your finances to a whole different level.
Here are a few basics every investor should learn
to build wealth for a comfortable retirement.
You have to invest to secure your future lifestyle.
Unless you are willing and lucky enough to be able
to work until you drop, compounding your wealth
is the only way to get to a secure retirement. The
good news is that your investments will build wealth
on your behalf over time. With a solid understanding
of how markets work, you can let your money work
for you to create the retirement of your dreams.
• You can start investing with little money. New
innovations are making it cheaper and easier to start
investing, no matter how much money you have.
Many people start investing with just a few hundred
dollars, so there are no excuses for failing to save at
least a small portion of each paycheck.
Don't delay saving, because compound interest
will help you more the longer you invest your money.
Plus, starting earlier means you have more time to
fix and recover from mistakes, and you will have less
to lose on these potential mistakes if you make them
earlier in your career.
• Decide how much you can invest each month.
A successful wealth builder continually invests and
saves throughout his career. That's because your sav-
ings rate is the investment factor you have the most
One efficient way to save is to treat contributions
as an expense. Paying yourself first really works.
Figure out how much you can put away for the long
term, and then set up an automatic deposit of that
amount into an investment account the day your
paycheck hits your checking account. This way, you
won't have any excuses not to deposit the money for
• Scrutinise investment expenses. Costs matter a
great deal. From high fee funds to brokers who over-
charge to make trades for you, there are many oppor-
tunities to pay less to own exactly the same invest-
ments. You could find an exchange-traded fund that
tracks the same index with a lower expense ratio or
another broker charging cheaper fees to buy and sell
the same stock. Always be on the lookout for cheaper
and simpler options, since technological innovation
is constantly making investing cheaper and more
• Learn the basics of index investing first. There
may be some people who can beat the markets over
the long term, but almost everybody who
tries ends up underperforming the bench-
mark indices. And even if you manage to
beat the index, there's a high chance you
spent too much time worrying about market
movements when you could have gotten a
higher return working a part-time job.
Active investing can be sensible for a
select few people, but index investing is
typically easier and cheaper. Be realistic
about what is best for your situation.
• Think long term. Many people are scared
to invest in equity markets because of seem-
ingly random price movements. Short-term
valuations are unpredictable, but long-term
values will always track long-term prof-
itability of the companies in the market.
That's what you can count on when you
take the risk of owning stocks. Short-term
investing may be a big gamble, but long-
term investing is a solid vehicle to build
wealth as long as you can stay the course
when valuations inevitably fall and the media
is scaring everybody out of equities.
• Just get started. You can hesitate to
invest for years and end up missing out on
the beauty of having money work for you.
There are certainly many pitfalls to avoid
when it comes to investing, but you will be
well rewarded for prudently staying in the
markets for the long haul.
The hardest step to take is to start saving.
Once you begin tucking money away you
can learn about investments as you go. If
you manage to stay the course for long
enough you will prosper.
7 things beginning investors should know
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