1. Establish a Plan
Having established that you’d like to invest your money you need to formulate a plan, taking into consideration a few questions: How much can I invest? What can I afford to lose? What is the goal of my investments? How long am investing for to reach that goal? Do I know all the relevant investment definitions and terminology?
2. Understand Risk
Understand your risk tolerance and how you would feel if you lost some or all of the money invested. A common mistake for first time investors is to believe they are more tolerant of loss than they actually are, so when riskier investments start to decline, they often panic and sell. Taking a considered approach to risk and reward will insure you invest in line with your capacity for loss. Remember, anything you do involves risk – this also includes holding cash as its buying power can be gradually eroded by inflation.