While wouldn’t blame Canadians who are interested in investing for staying away from the market during the past few years. luckily seen market declines since about 2018, a pandemic disaster and now a market slump that would be challenging even for a soft landing.
However, the market is currently making a major recovery. In fact, the S&P 500 has returned to his 2021 levels. Therefore, now could be the perfect time to enter the market. But before that, be sure to think about the following strategies that every beginner should know.
Set aside some cash
Just because you want to invest doesn’t mean you have to put it all into stocks yourself. Instead, try to create a consistent strategy that includes safe investments for emergencies.
That’s why the first thing investors should do is set up an emergency fund. Ideally, this is equivalent to 3-6 months of his salary. However, it is not always necessary to keep it in cash. Instead, consider rating on guaranteed short-term investment certificates (GICs).
There are currently some GICs with interest rates of around 4.5% even with 30-day options. So you can build up fixed income at a great interest rate, but also have the option to redeem after 30 days if you want.
Think Long Term
Another aspect of investing that beginners should consider is thinking long term when investing. Don’t invest in stocks and expect huge profits after a year. You are not a professional investor. You are a private investor and a beginner at it. Therefore, avoid paying attention to stocks that may need to be rebalanced many times.
Therefore, before investing, take your time and research the market. And you’re featured on the Motley Fool, so it’s clear you’re already doing that. Part of this training should include exposure to a variety of stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other investment strategies.
In this case, a meeting with a financial advisor can be helpful. An advisor can help you define your long-term goals and understand your risk tolerance. Older investors are more likely to need cash quickly, so they don’t have the opportunity to make riskier investments than younger investors. So be sure to educate yourself, think long-term, and consult a professional.
Be consistent with small amounts
If you’re new to investing, don’t invest large sums only in the most popular stocks. Instead, consider investing small amounts on a regular basis. It could be as little as $100, or as little as $20. As long as your risk tolerance at the time allows it.
But be consistent. Make investing and strategy a part of your life. Consider setting up automatic deposits into a tax-advantaged account, such as a Tax-Free Savings Account (TFSA). It also creates alerts for stocks, ETFs, and other investments that interest you. For example, if there was a 5% drop, you would have money on hand to invest during the decline.
And if you’re looking for a way to get started, take a look at his ETFs like iShares Core S&P 500 Index ETF (CAD Hedged) (TSX:XSP). This ETF invests in companies in the S&P 500 and also has a dividend yield of 1.27%. So you can get a huge portfolio at a fraction of the cost. As of this writing, the stock is already up 7.5% year-to-date, so this is a great starting point for new investors.
So don’t be afraid to invest. Let’s dive in! Just follow these simple steps and you won’t have to worry about investing anymore. Plus, you’ll earn more than if you kept everything in cash.