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If you know next to nothing, how do you go about investing? The first thing you need to know about investing is how much do you really know? If it’s not much, then you need to read extensively to educate yourself.

In order to be well educated, you should study the basics. Find out what a stock, bond, or mutual fund is and what the differences are between these three financial products and their variables. Read books on finance and investing.

Talk to savvy investors, watch videos and live presentations. Once you understand the differences and risks involved in investing in each individual vehicle, you can move forward with confidence.

Now you can begin the second phase of investing learning. Gain experience by investing in small stocks and learn from your mistakes as well as your successes. But first find out what type of investor you are. Here are some pointers to help you get to the answers.

When you run your investment business, have a game plan and set clear goals for yourself. The answers to these questions will be valuable guides in your endeavors to invest your money.

o What is your schedule for investments?

o In which industries do you want to invest?

o How much money can you safely invest to meet your goals?

o Have you considered your short term financial needs or goals?

o Do you plan to make a living on these investments in your retirement years?

Determine your investment style. Are you willing to take risks? Or do you like steady growth? Think about this thought: will you be able to sleep soundly at night knowing your investments will go down and take a long time to go up? Or would you prefer to hand over your money to a fund manager? Do you like minimal risk in investing your funds? Take into account what type of risk taker you are as this will help you choose the financial instruments to invest in.

How long do you want to invest in stocks? Is it only 15 minutes a day? Or, do you think it’s the high point of the entertainment to spend 7-14 hours a week looking at the financial statements and discussing the merits of those stocks.

Think carefully about the answers to these questions. Knowing what kind of investor you are can help you play out your strengths and minimize the risks of the funds in which you invest.

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Source by Tim Gorman