Top tips for first-time investors

INVESTING is not just for fat cats.
Anyone who has the will to start can do so without breaking the bank.
This is according to Head of FNB Share Investing Carin Mayer, who shared five pointers to help get newbies into the world of investment up and running.
‘Some banks and asset management companies offer investment products for as little as R300 a month.
‘What is important is to read up on the various investment products in the market place and seek advice where necessary.
‘A first-time investor without much knowledge can easily fall for a product that does not meet their goals or is unsuitable for their life stage.’

1. How much can you afford to investment?
Once the decision to invest has been made, Mayer asserts it is important to make an overall assessment of your expenses to determine how much will be available to invest.
‘This process must be undertaken diligently and must consider your debts and monthly costs such as groceries, insurance bills and transport.
‘After determining monthly living expenses it should be clear how much can be set aside for investments.
‘Even if the amount is small, it will make a difference in the long-term. For example the FNB Share Saver account which invests in the Top 100 companies in JSE for only R300 per month.’

2. Decide what you want to accomplish from investing
‘Know what you aim to achieve – this will also determine the type of investment product that one can go into based on individual risk profile.
‘Emergency cash should not be invested in products for long term investments.
‘Investing in a single share can present substantially more risk than investing in diversified basket of shares.’

3. Set times frames and stick to them
‘The standing rule for investments is one should be in it for the long-term – five years or more.
‘To get the best out of your investment, it is better to set a long-term horizon.
‘If you decide to invest for a period of ten years for example, stay the course and never be deterred by market movements that may result in losses in the short term.’

4. Investing comes with risk
‘There are risks attached to investing, but this largely depends on the type of asset class one chooses.
‘For example, shares are more volatile than cash investments.
‘It is important to understand that some types of investments can be risky, but this does not mean they should be avoided because the market goes through ups and downs.
‘Gains can only be made when you are in it for the long-term.’

5. Do not procrastinate
‘It is never too early to start investing in shares.
‘History has shown that the markets always recover and move upward.
‘The sooner one creates the good habit of regular investing, the sooner one starts participating in market growth.’