My Personal Investment Journey

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The following post is by MPFJ staff writer, Kristina, who is a lifestyle and personal finance blogger. Kristina has over a decade of experience working in personal finance. She helps people plan their financial lives from college to retirement. You can follow her on Twitter @TKBlogs.

From a very young age, we are told to always save money because it is a good financial habit.  From the time that I was 15-years-old and started working at McDonald’s, I got into the financial habit of saving money.  

Every two weeks, I would set aside a percentage of my pay check and put it into my savings account.  Back then (in 1995), high interest savings accounts did not exist, so I was saving my money in a basic savings account.  As a teenager, I didn’t have a lot of expenses, and therefore I had a lot of money to spend at my own free will.

How I started investing

As a teenager, I had a great financial life. I had money to hang out with my friends, go to concerts, and buy anything that a teenager in a small town needed. Whenever my parents questioned my spending habits and asked if I was saving money, I would say “yes” because technically, every two weeks, I was putting money into my savings account.  The problem with keeping money in a savings account is that you have access to it anytime.  Therefore, whenever I wanted to buy something and I didn’t have enough money in my checking account, I would simply dip into my savings.  Later in life, I would learn that this is not a good financial habit.

Where I learned about investing

I went away to university to study French and Urban Planning, but I quickly changed my major to Economics after I started working for a bank. I was fascinated by money and how people can use it in their everyday lives. I had no idea that there was a whole world of investing outside of my basic savings account.

During the day, I learned about supply and demand in university and in the evening, I learned about investment products at the bank.  I loved talking to experienced bankers about their personal investments. I wanted to read stories about the great depression, and I wanted to learn what makes the market move on a daily basis.  I quickly became overwhelmed with all of the information that is available for new investors, but I couldn’t stop reading about it.

As I continued to gain investment knowledge at the bank and learn about the economy in school, I decided that my new personal passion in life was money.  I came to realize that the most important part of personal finance is the personal aspect.  Investors have to make sure that their investment choices are really the best option for their personal goals; the only way to know this to learn about individual investment products.

Common mistakes made by new investors

As a financial professional, I see a lot of common mistakes made by new investors, and as a person who has had her share of financial struggles, I can recognize a new investor when I see one.  Investing doesn’t have to be complicated, but sometimes people get so wrapped up in following the market movements that they forget about their personal goals.

The number one rule of learning how to invest is to keep it simple.  I know that trying to become an experienced investor by reading financial articles can be very tempting; but the truth is that experience comes with time, not with books. 

Many new investors want to jump right into the market and purchase high risk investments such as individual stocks, but this is a big mistake.  If you are not familiar with fluctuations in the value of your money, then you should ease into investing.  Start by purchasing pooled investments such as mutual funds or exchange traded funds, which give you market exposure and lower your risk with diversification.  As you gain experience and become comfortable with fluctuations, you can dabble into more sophisticated investment options. 

High risk investments, such as stocks, can offer high potential returns, but they can also have high potential losses.  If you are a new investor, the odds are that you don’t have a lot of money to invest, so the possibility of losing it all with one bad investment can be devastating.  This is why I always caution people to ease into investing.

How about you all? What is your best advice for new investors?

Share your experiences by commenting below!

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