5 Things First-Time Investors Should Know About Investing

Whether you’ve just started in your first full-time job at which you receive a 401K option or you’re looking to invest for the first time since paying off your student loans, there are a lot of questions you’ll inevitably have about investing for the first time. Or perhaps your child has graduated college, just got his first full-time job, and isn’t sure what to do in terms of investing. We sure had questions when we started investing! Whatever your circumstances, investing, 401Ks, and the stock market are confusing for those of us who aren’t professional financial advisors.

Here are five important things you should consider when investing in the market for the very first time:

Take the long view.

Despite booms and busts, remember that over the last 100 years the stock market has historically performed better than bonds and real estate and certainly better than cash sitting in a bank account. In 1900, $1,000 invested would have been worth close to $20 million in 1999! A 10-year time horizon can help you keep perspective and weather the ups and downs of the market.

Invest at your comfort level.

If you're considering an investment in the stock market, make sure you're only putting in an amount that you can afford to lose. Remember: During one week in September 2008, the market plunged 18 percent and on Black Monday of 1987 when the market fell more than 22 percent in a single day.