You want to start investing. You have discovered your risk preferences and have researched a number of investments that have the potential to fulfill both your short-term and long-term goals. You have created an investment account and have picked a handful the stocks from your list that you think might be the best options, to begin with. But then, when it comes down to it, you are too nervous to pull the trigger on making these investments. What happens when you press the “submit” button and send your money out into the investing world? Or, what if you invest but end up needing that money later? Worse yet, what if you lose your money altogether? How do you know that you are truly prepared to start investing? Just like many potential investors, you are probably prepared but are scared to take the plunge. Don’t worry just yet, though – why not just start slow?
Potential investors often don’t take a step back and realize that they can start investing extremely slowly if they chose to do so. In fact, many people assume that if they don’t put all of their discretionary money in from the start, they will never make a real profit. But, this is not necessarily true! You can start by investing in fractional shares or even create a monetary limit for your first investments so that you can learn the ropes before you get deeper into investing. The truth is that starting is the biggest step – no matter how small you start. Just to convince you further, we have compiled a list of the 4 biggest reasons why starting small can be a really great tactic for potential investors who are nervous to begin:
1. You Can’t Control What You Can’t Control
If you are nervous to invest, you are likely scared of the extraneous factors that inevitably come hand in hand with investing. These factors could be things such as inflation or unforeseen volatility that may affect the values of your investments. However, by starting small with your investing, you will quickly come to learn that there are simply some factors that are out of your control. That said, these factors may not be of huge concern to you as you continue down the investing road, because you will learn that you can beat them by making smart investment decisions anyway!
2. Pulling the Trigger Is the Hardest Part
Many people who are nervous to invest also have a mental barrier when it comes to making their first trade because they feel as though they are unprepared. If you are one of these people, the first time you invest money will probably be the most difficult. However, if you have done your research and picked investments that seem right for you, you will never truly know how prepared you are until you try! The truth is that you are probably more prepared than you feel. But, by starting small, making your first trade may feel less risky and you may help yourself to break down that mental barrier!
3. Action Reinforces Action
Even if you make your first trades pretty small, you will likely learn the ropes of investing fairly quickly. After making a few trades, you will probably already feel much more comfortable than you did before you had made any. From there, your actions will reinforce further actions and you will gain confidence in your ability to invest. So, by starting small, you are setting yourself up to make more frequent and informed investment decisions in the future – without the nerves!
4. You Can Always Ramp It Up Later
Lastly, starting small does not mean that you cannot pick up the pace later. In fact, it might even be better to start out small and build up as you go. That way, when you start putting more money into your investments, you will have a history of investment knowledge to stand on. Just remember, starting small now does not need to have any negative impact on your ability to make significant profits later.
As you can see, starting small can be a great tactic for investors who are nervous to begin. If you want to start small, you may want to read up more on investing in fractional shares or creating a budget for yourself!