: How to Start Investing
Money to Invest
In order to invest, you need an initial sum of
money to buy those stocks. This is called your
main capital. For example, to buy 100 shares
of a stock priced at 35 Riyals per share, you
need 3,500 Riyals plus enough money to pay
the authorized person’s fee.
Savings
If you have been saving money over the years,
then you may be able to start investing immediately. If you do not have a savings account
where you are accumulating money to invest,
opening a savings account is the first thing you
should do.
You don’t need a lot of money to open an account, but you will need to add to it regularly
to build up your balance. If you consistently
put at least 10% or perhaps 15% of each paycheck into your account, it will not take long
to accumulate the capital you will need to begin investing.
You should also plan to save most of your unexpected income like bonuses or grants that
you receive. You might even ask your family to
deposit the sum they are planning to give you
to your investment account so you are not
tempted to spend it. If you are finding it hard
to save as much as you would like, you might
consider cutting back on some of your spending and depositing that money too.
Remember, however, that you should always
keep about three to six months income in
an emergency fund in the bank to cover any
unexpected expenses. It is better if you do
not invest this sum of money to keep it for
emergencies .
Risks of Taking a Loan
You might want to borrow money from your
family or use the sums you saved to cover the
necessary expenses to increase the amount
you are investing. This approach, however, can
be very risky. If you lose the money, you might
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find it difficult to pay back the loan. In addition, you would not have any more money
to invest and you will not be in a position to
build your fortune.
How Much to Invest?
When you start investing, you have to decide the percentage of your capital you are
committing to different types of investments.
What you are looking for is a combination of
growth and safety. Growth will help you meet
your investment goals and safety will provide
a cushion if the market experiences a downturn.
It is important to keep in mind that investments that provide the most growth are also
the ones that carry the greatest risk of losing
money. That is because their value can change
very quickly. For example, stocks of small and
new companies are among the investments
that have the most growth potential and the
greatest risk of loss.
While each person must decide how much
fortune to invest in volatile alternatives, you
may want to consider these following guidelines.
• Invest no more than 10% of your total assets in high risk investments
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