Regardless of whether you are just starting your journey in the world of work or are in the middle of your professional career, at any given moment, it is advisable to regularly save part of your salary for a specific purpose. However, this is not about fulfilling your dreams, but about investments.
On some level, investing becomes a complex field, requiring knowledge, routine and intuition. However, all of us, following a few basic principles, can become investors.
Know what you want
At the beginning of each project, a plan is devised. When you know what you want to achieve and choose a realistic goal, determining the duration of the investment, the implementation of the plans will probably turn out to be easier.
Forms of investment may vary. On the one hand, they depend on professional training courses or other types of further education, which will translate into higher earnings. An alternative form of investment involves buying real estate or land. It can also include new tools, computer software, as well as vehicles and machines, which will be used to improve work or the quality of business services. The investment process can also be limited to financial instruments, by acquiring them step by step, e.g. shares, bonds, currencies.
It is necessary to analyse such ventures thoroughly, asking yourself these basic questions: Will it bring a profit? Does the profit balance with the risks and devoted time?
I’m not afraid of debt
Sometimes starting a new investment depends on the ability to take out a loan. Many people avoid this option, treating loans as a last resort. Meanwhile, credit can become an investor’s best friend.
The negative way of thinking, which is actually not bad, relates to loans taken out for consumer goods (e.g. cars), the value of which drops quite quickly. A completely different matter is loans, e.g. for finishing additional studies, company equipment or purchasing property. Of course, in each of these cases, it is necessary to calculate and compare your expectations with the possibilities.
The bank’s credit rating is not always an appropriate indicator. Every investor should reliably and calmly calculate whether he or she can afford to pay the loan instalments. If the answer turns out negative, you should consider additional income, while reducing the scale and thus the cost of the investment.
Additional money for extra expenses
Health problems, losing your job, theft – such misfortunes can happen to anyone. It is extremely possible that they will disrupt your investment plan.
To prevent this and gain peace of mind, having some back-up funds for unforeseen circumstances will help. They are known as reserve funds or saving for a rainy day. The amount of the additional funds and the possibility of quick access is of utmost importance.
The best solution would be to secure the resources that are sufficient to support you for 6 months. If this is unachievable, the basics of investment state that three months of financial support is fundamental.
The ability to access the funds quickly does not mean that it should be stored in cash. Short-term deposits or savings accounts, for example, seem to be a better solution.
Do not put all your eggs in one basket
In the case of investments in financial instruments, it is worth diversifying, so that the failure of one does not undermine your plan. In other words, it is about proportional variations in the content of the so-called investment wallet.
The problem is that there is no golden rule for all investors. Younger and those with a longer investment outlook might rely on riskier products that do not have to be profitable in the short term. On the other hand, more experienced or simply more cautious people will be inclined to look for products that are characterised by full protection of capital at the expense of limited earnings potential.
The world, including the financial sector, is open today so investors can target assets available abroad. In order to avoid getting into deep waters too quickly, it might be a good idea to start with currencies. The wide choice, attractive exchange rates, as well as the speed and security of transactions are ensured by popular online financial service providers. A good example is https://conotoxia.com/, which offers many financial solutions, including the exchange of 26 currencies from Europe, Asia, Africa and both Americas.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.