If you’ve got some extra money, the worst thing you can do is let it stagnate. Due to inflation, your money is losing value if it is not constantly growing. Letting it sit around might seem like the safest option, but it is the only way guaranteed to lessen your wealth.
However, most of us are not confident enough in our financial sense to start investing or trading. It may feel like you’d be going in blind.
The good news is, investing in stocks is actually easier than ever. With new technology, anyone can do it, regardless of your background. You don’t even need to compromise on work or relaxation. It shouldn’t be an onerous responsibility that takes up your downtime, but rather a fun hobby that makes you extra money.
Get familiar with robo-advisors
The main reason it’s so easy to start investing in stocks these days is because of artificial intelligence. AI has been used to create robo-advisors. These advisors use algorithms, along with the endless data they are capable of processing, to come up with the most accurate predictions and guidance. They have more information at hand than any human could have, and they are not swayed by emotion.
They don’t take control away from you, though. You ultimately make the final decision (even if that decision is to let the robo-advisor decide for you). You can even input your values and principles, so that it only chooses socially responsible options for you.
It might seem a little counterintuitive to put such important decisions in the hands of a robot, but in actual fact, no human is better-placed to make good money these days.
Use trading capital
Part of the problem with human traders is that our psychology inevitably biases us one way or another. This is even true when we have the best information available from robo-advisors. For this reason, it is important to only trade with money you don’t have a strong attachment towards.
You should never trade with money that you need in order to remain solvent. On the contrary, when you decide to invest, you should be ready to forget about using that money altogether. This is because if you are scared of losing your money, you end up making decisions based on emotion. Rather than letting things play out and ultimately coming out top, you make snap decisions the moment it seems like things are going badly.
Finally, even though robo-advisors will provide most of the information you need to make good decisions, it is important that you continue to learn about investing and stocks. You’re the one making the decisions, after all. You may be advised by a robot, but the end result relies on you.
The more you learn about investing, the more it becomes a hobby rather than a way to make a quick buck. You can start taking greater risks, in the confidence that you know what you’re doing. Eventually, investing will be one of your passions, and you won’t want it any other way.