Despite last year’s health scare, economists and financial experts are optimistic about 2021’s investment prospects. Indeed, the national main stock index recently rose to its highest level since last February. While most of the gains are thanks to oil and energy prices rising, there’s also the fact that people are slowly being vaccinated, pushing travel, real estate, and other stocks back up. So, if you’re thinking about investing, now’s a good time to start.
In fact, as an entrepreneur, you already have the right mindset to succeed in investing. Here’s how:
You make informed decisions
From digital marketing to product pricing, every business decision needs to be backed by data. Investment is the same. Before you put your money in any asset, you first have to forecast if your money will grow with it. One way to check is by looking at the company’s 10-K report, which includes their financial data for the past five years. It’s available for public view. This will let you see the trends in their success, letting you know if their stocks are worth investing in. You can also follow industry experts, read trade magazines, and conduct your research on other platforms.
You understand the importance of long-term investments
Whether it’s in the people that work for you, the software that you use, or the ad budget you have allocated, as an entrepreneur, you understand that investments are necessary to succeed in the future. Similarly, money investments are always more likely to be profitable if you are in it for the long-term. After all, prices fluctuate every year, but they increase or flatten over time. Ted Rechtshaffen, the President and CEO of TriDelta Financial, gives the last 25 years as an example, mentioning how returns are profitable as long as you don’t take your money out immediately.
You understand the difference between price and value
Just because a software, service, or supplier is cheaper than its competitor, doesn’t mean that it’s better. The same principle applies in investments. Not all cheap assets, like mCloud ($6.20/share) and Ely Gold Royalties ($0.73), will bring you that big return you’re expecting. However, the same can be said for expensive commodities like gold ($1,945/ounce).
The best kind of assets to invest in are those that will grow over the next 10 to 15 years. Utility companies like Polaris Infrastructure and real estate businesses like Marlin Spring are the best examples of this.
How to start investing?
You have the talent; you have the conviction—now it’s time to start investing. The first thing you have to do is open a brokerage account. This serves the same purpose as your wallet, but its contents are used to buy stocks and bonds. You can also employ the services of a broker, but an account will allow you to bypass their high fees and let you make your own investment decisions. Of course, this will require research on your end. The 10-K report mentioned earlier is a good place to start.
Other than that, you have to determine what type of investor you are. Depending on your income and the type of risk you’re willing to take, the percentage you’re investing every month may differ.
Whatever plan you settle on, make sure that it’s something you’re completely comfortable with. Investments should never feel like too much of a risk. After all, it’s meant to ensure financial stability in the future.