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How to Become an Investor
If you’re thinking of a career as an investor, there are some simple steps you can take to get started. Fortunately, in today's knowledge era, all you need is an internet connection or a few trips to the local library to learn about becoming an investor for a living.
Don’t fall for the misconceptions when you’re researching your potential new career as an investor. For instance, you don’t need to be rich already or have some sort of secret insight into how the stock market works. Truly, anybody can start investing and make it if they study and work hard.
Learn Investing for Beginners
The first step on your path to becoming an investor for a living is to start simple. Learn the basic rules of investing from the pros, and limit your risks until you become an expert in a few years’ time. Don’t try to rush investing and take big risks; your lack of experience will likely be a detriment and cause you to lose money at this point. There are no shortcuts.
First, learn about the basic types of investments you can make, their typical interest rates and payouts, and how to go about putting your money into them. For example, stocks are a very popular investment vehicle because they can have an annual average return of 10 percent. Investing in mutual funds involves many investors pooling their money into a fund and investing in bonds and stocks, and it’s usually not as risky as investing in the stock market by yourself.
Investing in fixed income securities, such as corporate, U.S. Treasury and municipal bonds, is typically a safe, but less lucrative, way to get a return on your money. You can also get into the real estate market by buying and selling property, or buying property, and then renting it out.
Raising Enough Capital to Invest
Investing for beginners involves one major step: getting the capital you need to make wise investments. There is no certain amount of money you need to get started, unless you’re going with a type of investment that requires a minimum. For example, you can’t invest in Apple with less than around $200, because their cost per share is more than that.
The best way to raise capital is to start small. Place a certain amount of money in a jar each week, or set your bank account to automatically add funds to your savings account on a regular basis. For example, maybe you set up a recurring transfer of $50 per week into a high-interest-yielding savings account.
You can also save money by paying down any debts that are collecting interest and holding you back. Create a budget of your monthly expenses and figure out ways that you can reduce these expenses. When you budget, you should be spending 50 percent of your after-tax income on needs, 30 percent on wants and 20 percent on your savings. Use an app like Mint or You Need a Budget to make this process easier.
Consulting With an Advisor
Whichever investing method you end up going with, make sure you consult with a trusted financial advisor before making any moves. You can ask family and friends who are good with investing for tips for finding an advisor or use the finder on the website for the National Association of Personal Financial Advisors.
If you don’t have any friends and family who can help, you can also take to Google and look for top-rated advisors on Yelp or at Google reviews. Ask about the kinds of services the advisor offers, their investing experience and successes, how they plan to charge you for their services, and how often you’ll need to meet with them.
Be wary of any financial advisor who tells you that you need to invest in specific companies and who pushes you to engage in risky investing behavior. Sometimes, financial advisors receive kickbacks for convincing clients to invest in certain companies, which is an unsavory and maybe even illegal practice.
Working in Finance
If you’d rather get a formal job in an investment setting instead of becoming an investor on your own, then look for jobs in the financial sector or at an investment firm. If you haven’t yet taken college courses, consider getting a degree or certificate in a program related to investing, such as economics or finance. Then, do as many internships as you can to build your network and guarantee you’ll have a job lined up after graduation.
Some entry-level jobs to consider include a position as a financial analyst, investment banking analyst, junior tax accountant or associate, financial advisor, or financial auditor. To find the right job in the financial sector, use your connections from college and your internships as well as financial industry headhunters and sites like Indeed and LinkedIn.
Trading Stocks for a Living
When you're looking into investing for beginners, you’ll find that many people recommend trading stocks for a living. While this is a way to make money, it can also be quite risky if you make it your full-time career. There is also a high threshold to become a certain kind of trader.
For example, day traders need at least $25,000 in their accounts to participate in the day trading market. A job as a day trader can be very stressful, because you'll need to sit at the computer for hours on end, monitoring news about the different markets, and making investment decisions based on those insights. Oftentimes, day traders lose money because they become frustrated and flustered and make bad trading decisions in the heat of the moment.
Instead of trying to make trading stocks for a living into your full-time career, do it on the side. Keep working your regular job inside of outside of the financial sector, and invest in stocks that are less risky and still pay off in the long run. For example, investing in blue chip stocks like Disney, Apple, Microsoft and Google is smart because these stocks are solid and pretty much guaranteed to give you a good return on investment.
Additional Investing Tips
When looking into investing for beginners, make sure you keep in mind that you need to invest logically and not emotionally. Go for proven investments like those blue chip stocks or stable investment funds instead of putting your money into companies that haven’t yet taken off or shown to give investors a good return. Go for long-term gains over short-term ones, because you’re not going to make millions overnight with investing. If an investment sounds too good to be true, it’s likely a scam.
Make sure you read up on and follow the wisdom from expert investors like Warren Buffett and Benjamin Graham. Don’t look on just any website for investing tips. Again, you want proven advice from successful people. Anyone can call themselves an “investment expert,” but there are, in actuality, very few successful investors out there giving great advice.
Now that you’re ready to get started investing, you’ll hopefully be able to parlay it into becoming an investor for a living. Remember, always, to be patient and give it time; excellent investors are not born overnight.
- A great way to begin your education as an investor is with two books by Benjamin Graham: "The Intelligent Investor" and "The Interpretation of Financial Statements." Known as "the father of financial analysis," Dr. Graham is famous as the man who taught Warren Buffet. Managing tax issues is an important part of investing. The IRS has all of their publications and many "Guideline" articles available online to answer any questions you have.
Kylie Ora Lobell has written about careers and HR for Legal Management Magazine, LiveCareer, LegalZoom, and WeWork.