Investing Tips for Beginners: How to Start Investing Today

Middle aged couple laughing in the kitchen

The best time to start investing, the old adage goes, was 20 years ago. The second-best time is now. It’s advice that holds true for stocks and other asset classes that benefit from compound interest, whether in the UAE or elsewhere. As you probably learned in school, the more time you stay invested, the higher your returns are likely to be – provided you reinvest any profits.

Yet, many UAE residents shy away from investments –they’re intimidated by financial markets, because they think they don’t know enough or don’t know where to begin, or because they believe they need to start with a specific amount. But whether it’s a fear of making the wrong decision, or analysis paralysis sparked by a surfeit of choice, there’s no reason to hold yourself back.

Why do investments matter?

Most people spend a lot of time worrying about their savings, but not enough about their investment strategy. Investing can help boost your savings and make your make your money work for you. Many investment products can earn you better interest or dividends compared to a traditional savings account. They can help you grow your money faster, so you're better equipped to reach financial goals like saving for retirement.

Investment tips for beginners to try

Investing as a first timer can be daunting, but with the right education and investment advice, you can confidently manage your own portfolio.

Start with small investments

You don't need significant savings to start investing. Don't let myths about needing a large lump sum to start investments hold you back. For many people, it may simply make sense to start small with any savings you have. With a systematic investment plan or SIP from Citibank, you can begin with as little as $100. That’s approximate equivalent of dinner for two people at a nice restaurant in the UAE.

Determine whether to prioritize debt repayment over investing

It's a good idea to pay down high-interest debt, such as credit cards, before making any investments. However, for lower-value loans, such as home mortgages, you may be able to make more money on the stock market than any savings you would gain from paying down the debt. Determine the difference between the rate of interest on your loan and returns from investment. If you see a higher return from investing in stocks – or even time deposits – than the interest rate, you may want to think about taking on more debt. Remember that there's also a chance of loss when it comes to investments. It's important to determine the priority of your debt and understand your risk appetite before making investment decisions.

Find reliable sources of investment advice

All investors, no matter how proficient, start somewhere. Even if you don’t understand the basics, these days the knowledge barrier to investing in the stock market has been lowered considerably. Seek out video tutorials from reputed financial experts or find articles that cover investment products and risks from trusted sources. Spend a few weeks taking online courses and expanding your knowledge through reading. Citibank offers a range of learning materials that can help you better understand different investment products.

Work with a professional financial advisor

A financial advisor helps individuals, families, or businesses reach their financial goals by providing strategies for debt management, savings, investment, estate planning and more. If you decide to work with a professional advisor, it's very important to find someone experienced and vetted. Do your research thoroughly. Ask your friends and family for recommendations or look for testimonials online. Speak to a few different advisors and evaluate their advice against the standard rules: does the advisor make a commission? Are you getting the same advice from multiple sources? What is the contrarian advice? Approach investing the way you buy a car – with a lot of questions and a lot of cross-checking, ensuring you keep control of your money all the while.

Your own bank or investment service provider may also have a team ready to help you make better investments. When you maintain $200,000 or more of total relationship balance with Citi, you get a chance to work with a dedicated Citigold Relationship Manager who can support you on your investing journey. 

Step-by-step investment guide for beginners

Ready to start your investment journey? Our step-by-step guide

  • Step 1- Spend some time thinking about your financial goals and what you hope to achieve in both the short- and long-term.
  • Step 2 - Conduct an audit and evaluate your income and outgoings. See where you can cut back and put a small amount away for the future. If you’ve got high-interest loans, focus on paying those off first. Consider where you can turn an expense into an investment – one meal delivery a week could be a significant saving, for example.
  • Step 3 - Find out about investing. Read financial articles, watch instructional videos, and grow your knowledge base. As in every other area of life, it’s important to remember to continue learning – whether it’s understanding the jargon involved or reading a balance sheet.
  • Step 4 – Finally, download a well-reviewed app and experiment with a virtual portfolio, without putting in any money. Once you’re comfortable, speak to your bank about opening an investment account and consider putting away small amounts into an ETF, for example, regularly.

Investing as a high-net-worth individual

The investment landscape is very different once you've made your first million. High-net-worth individuals (HNWIs) are typically more focused on considerations like:

  • Asset or portfolio diversification
  • Wealth preservation and growth
  • Estate planning
  • Tax planning
  • Overseas assets or business concerns

At this stage, it's practical to look past traditional investment advice and seek out the help of a professional. As a Citigold member, you get access to financial advisory services that support you throughout your wealth journey. Your relationship manager provides bespoke strategies that perfectly fit your financial goals for yourself and your family. You also have the chance to work with an insurance expert to keep your loved ones protected, and a treasure sales officer for more specialized tips on foreign exchange markets.

Final thoughts

Whether your investments are big or small, remember, to steer clear of unrealistic promises, and to rein in your impatience. Make sure you understand exactly how the investment is supposed to make money, and what fees you are being charged. Don’t sign away control at any point of time. And remember that all investing involves risk, so you must consider professional advice before investing. With a little dedication and some perseverance, you could soon be on the road to growing your financial wealth.

If you found this article useful, share it with family members or friends who could benefit from a few investment tips for beginners.

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Keith J Fernandez is an editor and communications professional who advises on marketing content strategy. He is based between the UAE, the Netherlands and India and writes about business, technology and personal finance.

 


 

This article is intended to provide general information about finance and investments and does not replace or should be taken as professional financial advice. The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article except information on Citibank N.A. – UAE products referenced herein.

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