Investment Strategies For Beginners
Be it investors, potential investors, or the general public who is looking to start investing, everyone gets excited the minute they have extra cash on their hands, and one of the usual plans is to invest it for quick profits. People want to start making their money work for them, and that’s a very understandable and rational thought, but sure enough, one needs to be practical about their finances as well. There is a lot of due diligence and groundwork that goes into understanding the financial markets before one must start investing, and it’s for their best as well! An investment making company will generally help you get started with your investment and offer you end-to-end insights into how to make more money and how to invest money to achieve your financial goals. However, there are a few things you, as an investor, must consider before approaching any asset management company or getting started on your investment journey.
Here are the top 8 factors you should consider before you start your investment journey to make more money:
1. Risk Vs Reward
Any kind of investment would involve a certain degree of risk. What’s important is that you take on calculated risk and stick to a risk/reward ratio suitable for your risk appetite. A risk/reward ratio compares the expected returns of an investment to the amount of risk undertaken to invest in that asset.
This ratio is calculated by dividing the amount the investor stands to lose if the price moves in an unexpected direction (the risk) by the amount of profit one expects to have made when the investment is closed out.
2. Pay Off Prior Dues
No investment can start without you actually being done paying off your dues and clearing your credit. A clean slate for all your debts is very essential to begin investing stress-free and focusing on returns.
3. Get Professional Advice
Sound professional advice can be just the right input you need to work through your financial audit and steer you towards an action plan. A professional adviser will be able to point out what’s missing from your financial plans, and help you identify financial goals and how your investments may achieve them.
Many investors feel confident enough to make their own decisions, but remember you don’t have to engage a professional adviser for your entire investing life. For some, expert input at the outset may be all it takes to get them going, while others may feel more comfortable receiving regular advice. Remember, too, whether you take advice or not, the investments you hold can fall in value as well as rise; you may get back less than you invest.
4. Create Cash Emergency Fund
Before you start investing it is very important for you to have a separate cash fund prepared just in case of emergencies. There is no questioning the volatility of the market and you can’t really depend on redeeming from market when in dire need. Having an emergency fund lets you start your investment journey with a bit more ease.
5. Investment Capital
The amount is investment capital you have can also affect your choice of investment. There is a clear difference between what you can invest in with ₦365,000 compared to ₦36,354,000. However, this does not mean that you are severely limited if you do not have a huge amount of spare cash.
It is not rare for investors to invest in leveraged products or use loans to give them the gearing they need. In fact, taking on a mortgage loan is a rather common way to make use of leverage since most of us will not be able to pay down the entire amount needed to buy a property.
6. Create Financial Goals
One of the most important questions often asked is how to invest money and earn quick profits! However, there is much more to investing than just expecting returns. It is equally important to have your financial goals set it place and invest accordingly. Be it buying a dream home, car or saving for retirement, an investment making company will know exactly how to help you get started.
7. Join Good Social Circle
While it’s absolutely vital that you switch to a mindset that’s focused on net worth and positive toward smart financial moves, you should also keep in mind that you are strongly influenced by your immediate social circle as well. If they’re not committed to those things, it’s going to be substantially harder for you to make those kinds of commitments.
Look at your social circle. Who are the people you see most often, particularly outside of work when you have the freedom to make those choices? Are those people financially minded? Do they make smart spending choices? Or are they constantly buying new things and talking about their latest purchases?
If you find yourself in a social circle that doesn’t ever consider smart personal finance and is constantly talking about the latest things and bragging about their latest expenditures, you should strongly consider shifting your social circle. Spend some of your free time at gatherings of people with a stronger financial perspective. Look for an investing club on Meetup, or simply explore other friendships with people you might not have ever hung out with before. You’ll build some new relationships over time, ones that are supportive of positive financial progress.
8. Research on market trends
How to invest money wisely is indeed a question every investor should be asking themselves or the investment making company who is helping them build a portfolio. Keeping updated about the market, staying on top of news in the world markets and knowing the current business trends makes it easier for the investors to pick their financial instruments for investment.