A Beginner’s Guide to Investing

A Beginner’s Guide to Investing

Welcome to the world of investing! Whether you’re saving for retirement, a big purchase or even educational expenses, these principles can provide a solid starting point.

Setting financial goals

Before diving into investments, ask yourself: Why am I investing? Investing is a way to have your money work for you. Investing usually has a “long-game” approach, like preparing for retirement or education costs, but you can also make more short-term goals like saving for a new vehicle. By identifying your personal goals and objectives, you can better align your wants and needs with an investment strategy.

There are plenty of investment opportunities out there, from potentially high-yield selections to lower-risk investments like mutual funds or corporate demand notes, like GM Financial Right Notes^®. Either way, investing can yield significantly more money over time than simply stashing it away in a traditional low-interest savings account.

Exploring investment types

There is no one-size-fits-all method to investing, and there are diverse options to consider.

• Stocks are pieces (shares) of ownership in a company. You make money either by selling shares after the stock value increases or you can keep your shares and earn regular returns from dividends, depending on the stock.
• Bonds are securities from corporations or the government that pay you regular interest payments over a set amount of time.
• Mutual funds are pools of investments from multiple investors that create a more diversified portfolio.

Real estate, commodities (like energy or metals) and index funds (a collection of stocks, bonds and other assets that track a specific section of the market) are also popular investment choices. Research each to understand their characteristics and align them with your goals and risk tolerance.

Understanding risk and return

Investing involves risk, but it also offers reward potential.

A variety of factors, including your financial standing, age and goals will influence your risk tolerance. High-risk investments can lead to increased returns, but higher unpredictability. Low-risk options tend to be more stable but could yield smaller returns. Balancing risk and return are key to constructing a strong portfolio. Diversification, a strategy of having several types of assets in a portfolio, can help to mitigate risk.

Starting your investment journey

Investing can seem overwhelming, but it doesn’t have to be. And there are several options you can explore to get started. The great part is you can start investing with relatively small amounts of money, then gradually increase that amount as you get more comfortable or want to explore potential opportunities.

• Open an account with a reputable brokerage firm.
• Research investing apps
• Contribute to a 401(k) or other retirement plan
• Purchase a Certificate of Deposit (CD)

Remember: investing is a long-term game, and patience is key. Check out the KEYS^® Online Planning For Your Future course for more information on investing and money management.

By Mandi Nemri

As a student intern from UT Dallas, Mandi is merging her writing passion and her interest in electric vehicles and financial advice with ease. Her enthusiasm for investing basics is rivaled only by her passion for concerts and cookie baking.