Whether it be building cash reserves for retirement, funding a child's education, or saving up for your dream car or holiday, investing can be a great way to generate wealth.
Essentially, investing is the act of allocating money or resources with the expectation of earning a positive return. However, doing this always involves some level of risk, as there is no guarantee that your investments will be bear fruit.
For this reason, and to give yourself the best opportunity of achieving success, it is important to educate yourself about the various investment options, strategies, and risks involved in any such activities. In this article, we'll explore some of the best ways of doing this.
Hopefully after reading it, you will be able to take a more strategic approach to investing and therefore make informed investment decisions, which will potentially earn strong returns over the long term.
Why should you invest money?
Before looking at ways to educate yourself before investing, it is worth clarifying why you should consider doing so in the first place.
Overall, there are several reasons why you may want to consider investing your money. These include:
Growing wealth: Investing money can help you grow your wealth over time and potentially earn higher returns than if you simply kept it in a savings account. Assets like stocks, bonds, and real estate, all offer opportunities for making good long-term returns if they are managed properly.
Build passive income: Another advantage of investing is that it can also help you build a stream of passive income. For example, investing in dividend-paying stocks or rental properties can provide you with regular income payments.
To keep up with inflation: Inflation can erode the purchasing power of your money over time. By investing your money, you can potentially earn returns that exceed the rate of inflation, helping your money maintain its value over time.
Help meet your financial goals: Investing can help you achieve your financial goals quicker. By investing your money wisely, you can potentially grow your wealth over time and achieve the important financial milestones you have set aside.
Take advantage of tax benefits: Certain types of investments, such as superannuation, and certain types of investment income, including that from real estate ownership, may be eligible for tax benefits. By investing your money in tax-advantaged accounts or investments, you may be able to reduce your tax liability and keep more of your money working for you.
Of course, it's important to remember that investing always carries risks, and there is no guarantee that your investments will earn a positive return. Therefore, it is important to do your research and understand the risks involved. Let’s turn our attention to how you can do that.
How to educate yourself about investing
If you want to invest your hard-earned money, there are several ways you can educate yourself on how best you can do so. Here are six of the most common.
1. Read books on investing
One of the best ways to educate yourself about investing is to read books on the subject. There are many critically acclaimed books available that cover a wide range of investment topics, including stock market investing, real estate investing, and personal finance.
Some popular investing books include 'The Intelligent Investor' by Benjamin Graham, ‘Rich Dad Poor Dad' by Robert Kiyosaki and 'The Little Book of Common Sense Investing' by John Bogle.
These books can provide valuable insights into the world of investing and help you develop a solid understanding of key concepts and strategies.
2. Attend investment seminars
Investment seminars can be an excellent way to learn about investing and connect with other like-minded individuals. These seminars are often led by experienced investors, financial advisors, or other investment professionals who can provide valuable insights into the overall investment process.
There are many of these types of seminars held throughout Australia each year, covering a range of topics such as property investment, stock market investing, and financial planning
Some popular investment seminars include the National Achievers Congress, the Property Buyer Expo, and the Australian Shareholders' Association conference.
3. Take online courses
Another way to educate yourself about investing is to take online courses. Nowadays, many reputable universities and institutions offer online courses on investment topics. These can be completed at your own pace and convenience, which means you can fit them around your work schedule.
Some popular online investment courses include ‘Investment Management’ which is run by both The University of Sydney and The University of Melbourne as part of their Master of Commerce and Master of Finance programs, respectively.
In addition, The Australian Securities Exchange (ASX) offers several online courses on investing, including ‘Investing in Shares’ and ‘Options Trading Strategies’, while The Financial Services Institute of Australasia (FINSIA) runs one called 'Investment Management Fundamentals’.
4. Follow investment news and media
Staying up-to-date with investment news and media can be an excellent way to stay informed about the latest investment trends and developments.
In Australia, there are several sources of investment news and media available for you to read or watch, including newspapers, magazines, websites, and television programs.
Some of the most distinguished include The Australian Financial Review, The Australian Securities Exchange (ASX), and the Australian Broadcasting Corporation (ABC).
Another excellent source is the Australian Stock Report. You can find out more information about that here.
5. Join investment clubs and groups
An additional way to educate yourself about the potential for investing is to join an investment club or group.
Generally run, and attended, by like-minded investors who share the common interest, they provide a forum for members to discuss investment topics, share ideas, and collaborate on investment opportunities.
Throughout Australia there are several investment clubs and groups that operate. These tend to cover a range of topics including stock market investing, property investment, and angel investing.
The likes of the Australian Investors Association, the Property Investors Council of Australia, and the Sydney Angels network, are among the country's most popular investment clubs and groups you can join.
6. Consult with a financial advisor
Arguably the best way to learn about investing is to consult with a financial advisor.
Providing you with personalised investment advice and guidance, a financial advisor can help you develop a strategy that aligns with your financial goals, the level of risk you are prepared to take on, and how long you want to invest for.
When choosing a financial advisor, it's important to pick someone who is qualified, experienced, and reputable. Look for a financial advisor who is licensed and registered with the Australian Securities and Investments Commission (ASIC), and who has a solid track record of helping clients achieve their investment goals.
Don’t be afraid to ask for referrals, or if they have a Google My Business or Facebook page, check out the reviews written about them.
Overall, educating yourself about investing is an essential first step in achieving your financial goals.
Although, it is not always a quick process, if you do your research, diversify your investments, and work with a qualified financial advisor, you can grow a sizeable, long-term nest egg on the back of informed decisions and savvy investment.