If you’ve got a little spare cash, you may be wondering how much money you would need to start investing. Here’s a look at how to get started as a tech investor.
You’re probably ready to start investing to help you achieve both your short and long-term financial goals. But as a new investor, you might not be certain how much money you really need to get started. You don’t want to invest too much and risk losing it all, but you’d also like to be able to see some real profit if things go well.
Here are few tips on how to become an investor and a look at how much money you should invest in a new tech venture or stocks.
Define Your Goals
So, how much money do you need to start investing? The truth is that there’s no hard-and-fast number that’s right for everyone. Instead, it’s all about determining how much you might need to achieve your particular goals and understanding which investments and amounts will get you there.
Think about how much money (or what percentage of your principal) you’d like to make per week, per month, or even per year with your investments. Then, look at tech investments that will help you to achieve that goal. While past performance isn’t an indication of future results, look for tech stocks that have a good track record. Plus, it’s wise not to rely on the latest trends while you’re still learning.
One of the first things to look for to see if a tech company might be good to invest in is to see if they have high revenue growth. If the company is growing its revenue at a high rate (typically around 20 percent and above), then it demonstrates that their tech products or services are in high demand for consumers. For example, the Nvidia company manufactures graphic processing units (GPUs) that are used for AI and self-driving applications. They show revenue growth of about 34 percent every year, showing that they might be a good tech stock to invest in. Another stock that is showing promise is StoneCo, a Brazilian fintech company that provides hardware, software, and digital payments to merchants. They continue to grow with adjust profits increasing by 425 percent in the first half of 2018.
Know Your Risk Tolerance
Whether you want to learn how to invest $20,000 or how to invest $100, you need to know how much you can afford to lose. Once you’ve figured out that number, never invest more than that amount. Operate under the assumption that you will lose money when you first get started. Even if you don’t face losses, assume that you won’t see a return on your investment in the timeframe you’ve hoped for. Make sure that, even if things go wrong, you’ll always be able to cover your basic expenses. Playing it safe and knowing your risk tolerance will help the rest of your tech investing strategy to fall into place.
Understand Your Timeline
Finally, you should figure out how quickly you want to see results with your investments. Are you interested in short-term investments that will give you a lower payoff, but will do so quickly? Or are you financially stable enough to wait for investments that might take a bit more time to show you a higher reward? This is exactly why it’s important to understand exactly how you plan to use your investing funds. Knowing your plans ahead of time will help you to better determine your timeline.
How to Become an Investor: Wrapping Up
Whether you’re ready to invest specifically in the tech world or you just want to find investments that will help you pad your income, remember that learning how to become a tech investor takes time. It’s also imperative that you do your research. Just because a tech firm or startup sounds intriguing, doesn’t mean they have the resources to really get their company off the ground or sustain future earnings. Make sure you know what you’re getting into ahead of time, and keep checking back here for more tips on which apps you can use to invest, track your spending, and much more.