Investing is a time-tested way of putting your money to work for you, as you work to earn more of it. Legendary investor Warren Buffett defined investing as “forgoing consumption now in order to have the ability to consume more at a later date.”

By investing your money on a regular basis, you may be able to multiply it many times over. That is why it is critical to start investing as soon as possible and with money set aside for that purpose. Furthermore, the stock market is a good place to start.

1) Risk
What is your risk tolerance (the possibility of losing money while investing)? Stocks are classified into large capitalization stocks, small cap stocks, aggressive growth stocks, and value stocks. They all have varying degrees of danger. After determining your risk tolerance, you can focus your investment efforts on stocks that complement it.

2) Investment Goal

You should also determine your investment goals. An investment goal could be to increase the amount of money in your account. Your investment goals might include buying a house.

3) Investing style

Some investors want to take an active hand in managing their investments, while others prefer to set it and forget it.

4) Investment Account
– Retirement Plan
– IRA or taxable account at a brokerage:
– A robo-advisor account

5) Diversify

In a nutshell, by investing in a range of assets, or diversifying, you reduce the risk that one investment’s performance can severely hurt the return of your overall investment portfolio.