3. Budgeting is Key

Creating a budget is an essential step in the investment process. A well-planned budget provides a clear picture of your income and expenses, helping you determine how much money you can comfortably invest each month. Remember, investing should not be a financial strain but a planned and budgeted allocation.

4. Know Your Risk Tolerance

Every investment carries some level of risk. Understanding your risk tolerance—the degree of variability in investment returns that you’re willing to withstand—is key to creating an investment strategy that you’re comfortable with. Typically, younger investors can afford to take on more risk for higher potential returns, while older investors may prefer safer, more stable investments.

5. Diversify, Diversify, Diversify

The age-old adage, “Don’t put all your eggs in one basket,” holds particularly true for investing. Diversification, or spreading your investments across a variety of asset classes and sectors, can help mitigate risk and smooth out potential returns. This could mean investing in a mix of stocks, bonds, mutual funds, and even real estate.