Why and How You Should Invest Your Money if You’re a Beginning Investor

You don’t have to be rich to invest your money in assets, but it does help if you know what you’re doing.

You don’t have to be rich to invest your money in assets, but it does help if you know what you’re doing. Impulsive and uninformed investment decisions can lead to financial trouble, whereas educated and calculated choices can lead to wealth. 

That’s not to say there are risk-free ways for Canadians to make money by investing. All investment decisions are risky. That’s the nature of the economy. You must be willing to lose money to make money. The larger the risk, the larger the potential return—generally speaking. 

For that reason, before you invest, you need to understand your investment risk tolerance

It also helps to know your financial goals and whether you want to make important financial decisions yourself or seek help from a financial expert.

Here’s a look at why and how you should invest and what you should invest in if you’re a beginning investor. 

Why You Should Invest

You might be wondering why you would want to invest in the first place when you could save money by putting your money away in a safe or a traditional savings account. 

You could save money in this way, but it’s not guaranteed, and even if you do, your wealth likely won’t keep pace with inflation. Your stack of bills now won’t be as valuable twenty years from now. 

Investing combats inflation. It’s a way for your wealth to keep pace or even overtake inflation. That means the value of the money you invest now could turn out to be worth more than its value today. 

Investing can be a better way to save and make money than squirrelling your money away in a safe or traditional savings account. 

How Should You Invest? 

As a rule of thumb, when you invest, you want to make decisions that minimize risks and maximize potential returns. Abiding by that rule may increase your chances of financial success—although, again, there’s no entirely risk-free way to invest.

That being said, some investment options are generally less risky than others. 

Safe-haven assets, for instance, can be on the less risky side of the investment spectrum. Safe-haven assets are assets whose value typically retains or increases during financially stormy times like the COVID-19 pandemic. 

Gold and silver bullion are hard, safe-haven assets that have historically performed well during times of unrest. If you’re interested in investing in these assets and are looking for where to buy gold and where to buy silver in Canada, it’s pretty easy. Just check out your local bullion dealer.  

When you buy silver and gold bullion, you essentially buy 1oz or more of the precious metals themselves. (Gold and silver bullion are coins, ingots, and bars of at least 95% and 99% purity, respectively.) Silver bullion is a far more affordable option for beginning investors. As of this writing, the price per ounce of silver is USD 23.56, whereas the price per ounce of gold is USD 1,764. 

Because gold and silver bullion are considered inflation hedges, in addition to safe-haven assets, both beginning and experienced investors will invest in gold and silver bullion to hedge against inflation and diversify their financial portfolios.  

Strong portfolios tend to include an array of investment products. When building and diversifying your portfolio, the goal is the same as investing: maximize potential returns while minimizing risks.