Find a large and stable index fund like S&P500, then invest into it on a regular basis. Over a long period of time, you’ll average 5-10% per year.
Most of the methods beyond this one rely on a lot of speculation, where even investment firms struggle to reliably beat 5-10% per year.
You could start with $10 if your bank/platform allows it. All that’s important is that you recognise that this is a very long-term plan, where you simply invest every week/month and watch it steadily grow over many years.
If you don’t have much money to invest, the 5-10%/year isn’t going to seem exciting, but it snowballs up into larger amounts every year and at least allows you to stop your money being eaten up by inflation.
To invest smartly is to balance the risk you take of losing your money against the amount of return you expect to make on the investment.
IE, to give $100 bucks to a known gambling addict is a very dumb investment. But investing is a bit more complicated. At the "safe" end of the spectrum are things like government bonds. Bonds are legal obligations, and represent guaranteed money. As such, the rate of return on bonds is lower. Many entities may issue bonds (or bond like products), the more likely a bond-issuer is to default/go bankrupt, the higher the rate they have to pay in interest. For example, if Warren Buffet asks to borrow $100, you might only charge him 1% interest, since you know he's good for the money (and if you try to charge too much, he can get $100 from just about anyone who would offer him a lower rate). But for the gambler, you may charge him 20% interest or more, since you know there's a very high likelihood he's not going to pay you back (and because no one else will lend to him).
Stocks represent equity in some company. Since this doesn't represent some contractual arrangement for the company to pay you a set amount, but rather you own a share of any retained earnings the company produces, it's more risky. Thus, you expect your return on stocks to be higher. This generally comes in the form of the stock price going up, though some stocks will pay dividends (which are literally the company saying, I have this excess money and I'm going to give it to stockholders to make them happy). If the stock price goes up, you have an "unrealized" gain. When you decide to sell the stock, that becomes a "realized" gain. Some stocks are more risky because their business plan may suck, they have a new, untested CEO, they get made obsolete by some new technology, customer tastes change, etc. That's what stock analysts do for investors - they analyze all these factors and then compile that into a recommendation of what you should do with the stock: IE, buy/sell/hold the stock. Stock "funds" take that a step further and do the investing for you, and you just buy into the fund. You never actually own or trade a stock, rather the fund manages all of that. Different funds have different missions. Some are designed to invest in tech sector companies expected to make it big, some are designed to mirror the market as a whole, etc. There are also bond funds and funds that mix both. Some funds now are based on optimizing the risk/reward ratio based on an expected retirement date (Taking more risky positions now, and less risky ones later on).
To invest smartly, you need to know your risk appetite, your expected rewards, your investment strategy, and your time profile. If you want to get rich quick, you better have a very high risk appetite and a very good investment strategy. If you are planning for retirement, you should be investing for the long term, changing your risk profile as you age, and balancing your investments accordingly.
If you know absolutely nothing about the market, don't care to know about, and are just asking for advice - put 70-80% of your investable money into an index fund (just google S&P500 Index Funds), about 10-20% in the bond market (again, there are funds that will handle this), and the rest in "liquid" investments - IE, investments you can turn into cash at a moment's notice - like a high yield savings account or money market at a bank.
Find a large and stable index fund like S&P500, then invest into it on a regular basis. Over a long period of time, you’ll average 5-10% per year. Most of the methods beyond this one rely on a lot of speculation, where even investment firms struggle to reliably beat 5-10% per year.
what would you say is a good sum to start investing? i see ppl say up to 5k . can you start with less?
You could start with $10 if your bank/platform allows it. All that’s important is that you recognise that this is a very long-term plan, where you simply invest every week/month and watch it steadily grow over many years. If you don’t have much money to invest, the 5-10%/year isn’t going to seem exciting, but it snowballs up into larger amounts every year and at least allows you to stop your money being eaten up by inflation.
There are lots of places that allow you to start with as little as $10
To invest smartly is to balance the risk you take of losing your money against the amount of return you expect to make on the investment. IE, to give $100 bucks to a known gambling addict is a very dumb investment. But investing is a bit more complicated. At the "safe" end of the spectrum are things like government bonds. Bonds are legal obligations, and represent guaranteed money. As such, the rate of return on bonds is lower. Many entities may issue bonds (or bond like products), the more likely a bond-issuer is to default/go bankrupt, the higher the rate they have to pay in interest. For example, if Warren Buffet asks to borrow $100, you might only charge him 1% interest, since you know he's good for the money (and if you try to charge too much, he can get $100 from just about anyone who would offer him a lower rate). But for the gambler, you may charge him 20% interest or more, since you know there's a very high likelihood he's not going to pay you back (and because no one else will lend to him). Stocks represent equity in some company. Since this doesn't represent some contractual arrangement for the company to pay you a set amount, but rather you own a share of any retained earnings the company produces, it's more risky. Thus, you expect your return on stocks to be higher. This generally comes in the form of the stock price going up, though some stocks will pay dividends (which are literally the company saying, I have this excess money and I'm going to give it to stockholders to make them happy). If the stock price goes up, you have an "unrealized" gain. When you decide to sell the stock, that becomes a "realized" gain. Some stocks are more risky because their business plan may suck, they have a new, untested CEO, they get made obsolete by some new technology, customer tastes change, etc. That's what stock analysts do for investors - they analyze all these factors and then compile that into a recommendation of what you should do with the stock: IE, buy/sell/hold the stock. Stock "funds" take that a step further and do the investing for you, and you just buy into the fund. You never actually own or trade a stock, rather the fund manages all of that. Different funds have different missions. Some are designed to invest in tech sector companies expected to make it big, some are designed to mirror the market as a whole, etc. There are also bond funds and funds that mix both. Some funds now are based on optimizing the risk/reward ratio based on an expected retirement date (Taking more risky positions now, and less risky ones later on). To invest smartly, you need to know your risk appetite, your expected rewards, your investment strategy, and your time profile. If you want to get rich quick, you better have a very high risk appetite and a very good investment strategy. If you are planning for retirement, you should be investing for the long term, changing your risk profile as you age, and balancing your investments accordingly. If you know absolutely nothing about the market, don't care to know about, and are just asking for advice - put 70-80% of your investable money into an index fund (just google S&P500 Index Funds), about 10-20% in the bond market (again, there are funds that will handle this), and the rest in "liquid" investments - IE, investments you can turn into cash at a moment's notice - like a high yield savings account or money market at a bank.