How to invest wisely

How to invest wisely

“People don’t have the patience to get rich slowly. Instead they decide to ruin themselves quickly.”

Peter Lynch

 

Have you been thinking about investing your money for some time, but don’t dare to take the plunge because it seems difficult and daunting? Investing your money doesn’t have to be a complex process. All you need is a basic knowledge of finance, a lot of patience, some common sense and the opinion of an expert to help you make the most of your investment.

’m sure you’ve heard plenty of wonderful stories about people who became rich overnight by investing in stocks without having much knowledge of financial markets. Unfortunately, even though films and books are full of success stories, this rarely happens in reality.

In the real word, the vast majority of millionaires knew what they were doing when they invested their money and built their wealth through a lot of effort and, in most cases, over a long period of time.

If you think the time has finally come for you to take the plunge and start investing, it’s important that you bear in mind the following aspects:

  1. Set yourself a goal and decide how much money you can invest. It’s essential to determine what your goal is in terms of investment (save towards your retirement, earn short-term returns or save a lump sum for the purchase a flat, etc.). A good way to increase the amount of money you can save is to earmark 15% of your monthly income for investment. If you can do that, set up a standing order. The amount will be deducted from your current account and transferred to your savings account without having to worry about it. It’s the best way to keep control of your finances. Once you’ve set up a standing order, you won’t have to worry about transferring the money every month.
  2. Determine your risk profile. It’s important to understand how much money you can risk. Remember, if you’re looking to earn higher returns, you’ll have to take a higher level of risk. Knowing how much risk you can take will prevent you from risking your savings —you might need them in the short or medium term—and will help you choose the investment products that best suit your needs and your budget.
  3. Diversify your investment. “Don’t put all your eggs in the same basket”. Diversification is key to reducing the risk of loss. The problem when you invest in a single company (or in a single sector or country) is that if something goes wrong, there are many chances that you will lose all your money. This happens more often than you think. Make sure you choose companies with sound fundamentals in terms of sectors and markets, and invest your money in different products and over various terms.
  4. Stay informed. Read news about markets, stocks and investment strategies. Everything helps and it could be useful in making the right decision. If possible, seek advice from an investment adviser to assist you in making your investment decisions. It’s always good to get help from an expert, especially when it comes to your money. Having a professional by your side will help you make the best decisions at the right time and will also expand your range of investment options.
  5. Patience and common sense. Remember, investment is a marathon, not a sprint! The value of your investment will go up and down over time. That’s completely normal. The actual results of an investment can only be measured in the long term, so having a long-term vision will help you put things into perspective. Be consistent, be patient and listen to your common sense!

Whether you decide to pick your investments yourself, invest in an index or seek advice from a professional, the most important thing is to know your options first and make an informed decision. Once you’ve decided to take the first step and begin investing, always bear in mind that your main goal is to make sure that your money is invested in the right place.

 

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