The Smart Investor
    Facebook Instagram
    Tuesday, January 31
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Getting Started»A Beginner’s Guide To Investing
    Getting Started

    A Beginner’s Guide To Investing

    Herman NgBy Herman NgMarch 14, 2021Updated:May 5, 20226 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    For many people, investing can be a daunting concept.

    With a whole range of financial information available online, beginner investors are often confused about where to start.

    As a result of this confusion, many put off the topic of investing, believing it to be complicated and only suitable for professionals.

    But that’s not the case at all.

    If you’re interested in starting to invest, and are looking for a place to arrange all the information you need in a concise and coherent manner; you’ve come to the right place.

    This article is the first part in a series of guides that The Smart Investor will be publishing to help new investors.

    These guides will equip you with the right skills, knowledge, and time-tested principles to kickstart your investment journey.

    We promise it won’t be too complicated.

    What is investing?

    Investing, as defined by Benjamin Graham, is an activity that promises safety of capital and a satisfactory return, upon a thorough analysis of the underlying asset.

    This means that any sound investment should not place your invested capital under unnecessary risk, while still providing a return that beats inflation.

    Graham, famous for being the father of value investing, believed that any investment that did not meet the above criteria should be termed “speculation”.

    As an analogy, imagine you intend to buy some durians.

    If you were speculating, it would be like showing up at the fruit stall and picking several durians that looked the prettiest to you.

    But if you want to get a sweet and creamy durian, you would have taken time to inspect the fruit and attempt to tell if the flesh within will be to your liking. More meticulous customers may even request a sample.

    Investing is similar to the latter process.

    When you buy shares of a company, you are paying for a piece of a living, breathing business.

    It would make sense for investors to get a good sense of how healthy the business is before buying a slice to own.

    One of Graham’s students, Warren Buffett, himself a very successful investor with decades of experience, also preaches this practice of doing research before buying a stock.

    In his 1996 letter to shareholders, Buffet wrote, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

    Why should you invest?

    “If you don’t find a way to make money while you sleep, you will work until you die”, quips Warren Buffett

    Everyone has his or her own personal financial goals.

    It could be funding a dream holiday, purchasing a brand new home, or getting that cool car.

    You might even be thinking of building a passive stream of income during your retirement so that your golden years can be enjoyed without breaking a sweat.

    By investing your money, you will be able to grow your wealth and achieve your financial goals much quicker.

    If you invest $1,000 in the stock market, which, on average, rewards investors with returns of 8% a year, your initial investment will double to $2,000 in nine years.

    In contrast, a savings account which yields 1% per year will only turn your $1,000 into a paltry $1,094 in the same nine years.

    This process, known as compounding, becomes much stronger when you enjoy a higher rate of return.

    Thus, by investing prudently, you can grow your pot of money more quickly and achieve your retirement goals in a shorter period of time.

    How to invest your money

    There are several investment options available in the market.

    Stocks, as you already know, represent ownership of a company. Shareholders earn returns either through share price appreciation (i.e. capital gains) or dividends.

    Bonds, on the other hand, are a form of borrowing by companies or governments. When you buy a bond, your principle is typically guaranteed and returned to you when the bond expires.

    Bondholders will receive a regular interest payment, also known as coupons.

    Another popular option for investors is exchange-traded funds, or ETFs.

    ETFs contain a basket of stocks that allow investors to gain exposure to a certain market or industry without having to pick individual stocks.

    Robo-investors, a form of automated investing, are also rising in popularity in recent years.

    Robo-investors allow investors to take a hands-off approach to investing, making use of algorithms to manage an investment portfolio based on one’s goals and risk appetite.

    Assessing your goals

    Before you start to invest, it is important to know what your objectives are.

    Defining your objectives keeps you grounded and helps maintain your discipline as you navigate the turbulence of the financial markets.

    You could be targeting financial goals such as achieving a specific stream of passive income in retirement or amass a certain level of wealth by a certain age.

    With a tangible goal, you can clearly outline the steps needed to achieve these goals.

    These steps can include knowing how much and how often you need to invest over the years, and correspondingly, how much to budget each year.

    Opening a brokerage account

    If you’re now ready to begin investing, you will need to open a brokerage account.

    A brokerage account allows you to access financial markets, as well as buy, sell and store your securities.

    There are, however, many factors to consider when picking a brokerage.

    You might not be familiar with the fees charged, what markets can be accessed, and the reliability of the broker itself.

    But fret not, as we will be publishing a brokerage comparison on The Smart Investor’s site very soon.

    What is the fastest way to jump from a “newbie” investor to a seasoned pro. Our beginner’s guide shows everything you need to know to buy your first stock and beyond. Click HERE to download it for free today.

    Click HERE to get our latest and hottest articles in your email inbox today! Sign up for Smart Reads to get the latest investing news, analyses, and stories for FREE! 

    Don’t forget to follow us on Facebook and Telegram for some of our latest free content!

    Disclosure: Herman Ng does not own shares in any of the companies mentioned.

    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Merger and Acquisition

    What Makes Some Serial Acquirers So Successful

    January 30, 2023
    Data Centre (Sunlight)

    5 Key Takeaways from Mapletree Industrial Trust’s Latest Business Update

    January 30, 2023
    Screen Showing Share Prices

    Get Smart: Why You Shouldn’t Focus on Share Prices Alone

    January 29, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.