Blog Misc 6 Easy Ways to Become an Independent Investor

6 Easy Ways to Become an Independent Investor

date October 19, 2021 time 5 min read 466 views

Managing your own investment success is a financial goal that most of us aspire to, but not many achieve. Do you want to invest on your own? Let’s dive in. We will recommend 6 ways to help you become an independent investor.

Investing can be one of the best ways to grow your financial assets over time, and an individual who invests based on personal choices and funds can be an investor. In other ways, anyone can become an independent investor with enough knowledge, recognition of their enneagram core motivations and willingness to take risks. Here are 6 easy ways to become an independent investor. 

1. Save your funds

The first way to become an independent investor is to start labeling a jar and putting spare coins in whenever you can. Other people create an online savings account and transfer funds each month. Whatever method you choose, it’s a good idea to have a sum of cash set aside to begin your investment. Do not forget to have three to six months’ worth of emergency savings set aside.

Saving funds is a vital first step you need to complete before making investments.
Saving funds is a vital first step you need to complete before making investments. (Source: Pixabay)

Having sufficient funds in a bank account helps an independent investor to cover emergency expenses and other costs before they tie up a large chunk of change in long-term investments.

2. Invest in yourself

Before becoming an independent investor, you should invest in yourself not to fail or lose easily. Investing in yourself means improving your work ethic, skill set, or wealth of knowledge that could advance your career, or start over in a major you want to pursue. Although it will cost you money, it can increase your income substantially in the long term.

The more you invest in your career skills and financial knowledge, the more it pays off over time
The more you invest in your career skills and financial knowledge, the more it pays off over time (Source: Pixabay)

Books, blogs, financial podcasts or videos, and even training courses are invaluable sources of knowledge that you can learn a lot about investing your money. Spending time reading financial literacy books for beginners or listening to the advice of experts can help you gain a wider understanding of your options once you choose how to invest your funds.

3. Evaluate your portfolio frequently

Even if you plan to put money into a fund and not withdraw it for a long time, you should assess how well your investments are doing at least annually if not more frequently. You need to check to make sure that the goals you have set match your risk tolerance, financial situation, and time horizon. 

An independent investor’s checkup should include an assessment of their portfolio's overall returns at least annually.
An independent investor’s checkup should include an assessment of their portfolio’s overall returns at least annually. (Source: Pixabay)

The measures you choose depend on the types of investments you own. Some independent investors check stock values frequently as they plan to sell their shares. Some planning retirement funds usually check to see how their investments are performing, especially when they are near retirement age. Others choose to reinvest dividends to purchase more stock, thus drawing from their investment to grow it. 

4. Decide where to adjust and invest

After having knowledge and experience and reviewing your initial investments, choose carefully and decide what you need to adjust and invest. Before taking action, you need to consider the rate of return to your investment, how long you will keep your funds in the account, and any financial fees for withdrawing or moving funds.

An independent investor can research three options: Equity, Debt, and Alternative investment to find the best funds to invest in.

After reviewing the portfolio, an independent investor should make a plan for how and where you want to invest in the next stage. (Source: Pixabay)

Equity investment can be done via direct stocks or mutual funds. For an independent investor, investing in direct stocks is quite complicated and tricky which requires a lot of financial knowledge. If you can devote adequate time to analyzing the markets and monitoring investments, you can challenge with Direct Equity. Else, you can go the mutual fund route including two types of MFs: Passive Funds (index funds) and Active Funds.

Debt investment is not advisable for independent investors as the minimum amount required to invest is pretty high. You can consider investing in a five-year-Debt mutual fund instead to get the overall risk of the portfolio down.

In addition to equity and debt investments, an independent investor can consider alternative investment options such as Gold, REITs, cryptocurrency investment, etc. It is recommended that your investment in alternative options would be around 10-20% of your portfolio. 

5. Start small

Starting from small amounts of money can simplify online investing for beginners and help you learn how to manage risks and gain hands-on experience. As your investing knowledge and confidence are grown, you can take more risks with your funds. Hence, as an independent investor, you should decide on a reasonable amount of money to start based on what you have saved for this purpose. 

Starting small can help beginners to have a good understanding of who you are as an independent investor. With the small initial investments, you can get lessons from loss or failure, then identify the appropriate investment strategy for big ones. Having experience in the financial market is a great way to avoid knee-jerk reactions to fluctuations and reduce the risk of making the wrong decisions. 

If you want to be more hands-on with your investing but do not afford to buy full shares of a stock or an ETF, you can take a look at fractional shares or invest your pocket change with micro-investing apps. This allows you to buy a portion of stock for a fraction of the price.

6. Invest with peer-to-peer lending platform

Also, you can get started with minimal investments and gradually build your portfolio over time, even if you are on a tight budget through P2P lending.

MyConstant could be an ideal component of your investment portfolio, providing you with steady returns on your terms. You can lend money online with us or deposit your USD.

Furthermore, if you own some cryptos and haven’t planned to buy more yet, you can earn interest on crypto up to 7% APR.Sounds interesting? Sign up for a free account today and start investing.

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