Jumping into investing without first examining your finances is like jumping into the deep end of the pool without knowing how to swim. On top of the cost of living, payments to outstanding credit card balances and loans can eat into the amount of money left to invest. Luckily, investing doesn't require a significant sum to start.

You don't need to be a financial expert to invest, but you do need to learn some basic terminology so that you can be your own expert. Investing can be harmful and cause the loss of money or savings if done without knowing the basics. To learn the basic, Royal Capital Limited has the best resources.

Before deciding on which investments are right for you, you need to know how much risk you are willing to assume. Do you love fast cars and the thrill of a risk, or do you prefer reading in your hammock while enjoying the safety of your backyard? Investments that carry more risk offer a higher potential for return. Conversely, lower-risk investments generally offer a lower rate of return. In the perfect scenario, an investment portfolio that has a high return with little risk is the objective for any investor.

The type of advisor that is right for you depends on the amount of time you are willing to spend on your investments and your risk tolerance. Choosing a financial advisor/broker is a big decision. Factors to be considered, such as reputation and performance, how much they charge, how much they plan on communicating with you, how are their research persons and what additional services they can offer.

Now comes the best part of choosing the investments that will become a part of your investment portfolio. If you have a conservative investment style, your portfolio should consist mainly of low-risk, income-producing securities such as treasury bonds and money market funds. For those who do not want to pick individual stocks or bonds, you may look to mutual funds.