Many investors are ignorant when it comes to investing. There is nothing wrong with being ignorant. Ignorance simply means that you do not have enough education on a subject or field of study.
When starting something new, most people want to jump right in with both feet. Sadly, most people will not be successful by throwing money into something that they do not fully understand. It would be much wiser to realize that ALL investments have risk associated with them. The reality of losing some, or even all of your money, is a very real possibility. Any kind of investing, no matter what, will require you to have some basic skills.
It is prudent, long before you start investing, to gain as much information as possible on the subject of investing. It is my recommendation to focus on only one investment vehicle initially. Do you know how the stock market really works? Would you rather make money by investing in real estate? Picking just one area of expertise will allow you to master that specific subject through education and experience.
Additionally, you also need to lay out your investment goals. Do you know what you really want to achieve by investing in this specific area? For example, your goal may be to be able to provide for your child's college education. Before you start investing your money, it is a good idea to consider what goals you want to target with your investment. Set your goal to be a certain amount of money in 15 years time. With your goal clearly in your mind, you will be in a much better position to make intelligent decisions. As things progress, you can make better choices and adjust your risk tolerance.
Sadly, many people invest with the hopes of becoming rich overnight. This is not impossible, but it seldom happens, so don’t count on it. It is a bad idea to start investing with a goal of trying to get rich overnight. For one thing, your goal is much too vague and undefined. For another, your goal requires you to take way too much risk in order to achieve your goal.
A much safer approach is to plan to invest in a way that will enable your money to grow over time, slowly. If you have read my book, Start Winning With Money, you will remember that step one to investing is preservation of your hard earned capital. Trying to achieve wealth overnight does not allow you to preserve capital, as you will take on way too much risk in your investments.
Once you have achieved your targeted goal however, you will be able to use the return on your investment for your child’s education. Ideally, you will have invested a lot less money than the total amount of money received at the end of your investment term. The big idea behind investing is that your money compounds on itself without you having to physically do anything for that money.
Before making any investment, it is a good idea to consult with a financial planner. I recommend that you sit down with an advisor that charges by the hour, not an advisor that gets paid based on how much money you give them to manage. A good, fee-based financial planner should be able to advise you and help you with the financial goals you've got in mind. He or she should be able to give you an idea of the realistic returns your investment will return over the long term, and when you can expect to reach your overall financial goals.
Investing is much more complicated than just buying and selling something, whether that something be stocks, bonds, mutual funds, ETF's or real estate. In order to be successful, and achieve positive returns from your investments, you will need to do some basic research and have some general understanding about your chosen investment vehicles.