Investing: Start Early, Start Small, Start Virtual

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When I was in college, I lost a lot of money in stocks. Luckily all of it was in stock exchange simulations.

Saving and investing is a crucial life skill, if you are expected to reach the age of retirement. Retirement might seem far away, but the earlier you start to save and invest, the less you need to save, the earlier you can retire, and the more you’re going to have in your retirement. Therefore, it’s never too early to start saving and investing.

Investing is a skill you need to master. You need to learn as much as possible from credible resources. You also need to gather experience. Managing your money is a very emotional subject. That’s why knowledge is not sufficient, experience is also needed.

Beginners are prone to make mistakes in their first few years of investing. For that reason, starting small and starting virtual is a good idea. When I was in college, I lost a lot of money in stocks. Luckily all of it was in stock exchange simulations. These losses were on a website where I could invest with play money. The stocks that I invested were real life stocks. So, I was able to test my investing skills on real life stocks without losing any real money. Those trades taught me a lot of lessons about investing.

If you don’t have access to an online stock market simulation, you can invest on paper. You can write down your investments in a diary and follow the prices over time. Don’t expect to make a lot of money investing in stocks, especially in the first few years. Devote the first few years to learning as much as possible and gather as much experience as possible.

“You don’t have the option to not invest your money.”

If you feel like investing real money, keep the amount small. That way, your losses will be small as well. Don’t get discouraged, if you lose money. You don’t have the option to not invest your money, because the governments are officially aiming for 2% inflation each year. That means your savings will lose at least 2% of their value every year. You need to invest your savings wisely to offset at least that amount each year.

There are three books that I’d like to recommend to people who just start saving and investing. I recommend reading them in the order that I present below.

  1. Rich Dad, Poor Dad by Robert Kiyosaki
  2. One Up On Wall Street by Peter Lynch
  3. The Little Book of Behavioral Investing by James Montier

Disclosure

This post is for information purposes only and not intended to be investment advice.