Let’s get this out of the way: you’re unlikely to get rich through investing alone. The people that do are either professional traders or very lucky. If you set your goals too high and chase big numbers, you might make unwise investment decisions – and that’s a path to ruin.
Instead, research what’s possible and set a goal at or below that point. Remember, anything above the rate of inflation (around 2% in the US) grows your money, so don’t enter risky investments because the potential returns are high. Set realistic investment goals and then adapt them when you’ve had more experience.
The higher the risk, the higher the reward. While true, this doesn’t mean you should jump on the first high-risk investment you find. You might earn a better return, but if it goes wrong you’re left out of pocket – can you afford to lose?
Instead, consider what level of risk you’re comfortable with first. Then choose applicable investments instead of opting for the best rates just because you can. Once you’re comfortable with risk and can absorb a potential loss, you can invest with peace of mind.
You wouldn’t put all your eggs in one basket, and you shouldn’t put all your money in a single investment. Doing so creates a single point of failure. Even if it’s a great rate or considered only moderate risk, you might lose all your funds.
Instead, spread your money across multiple investments. That way, if one investment loses money, the others will cushion the blow. It’s common sense, really, but you’d be surprised how few people follow it!