Do you want to get some benefit from your savings? Do you want your money to start working for you? Have you decided to invest? !! Congratulations!! Without a doubt, it is a decision that will change your life and your financial situation.
There are different options to invest money and if you don’t have experience you are probably a bit lost… But don’t worry. In this article I am going to share some recommendations that you should take into account before starting out in the world of investing.
Do you know what type of inverter you are?
Before investing, it is essential that you determine what your investor profile is. For this it is important to know your current financial situation, your financial goals and when you want to achieve them, your risk tolerance and the financial knowledge you have.
Your investor profile can be:
- Risky. If you have financial knowledge and you already move in this world. You will be willing to risk your capital to obtain a higher return.
- Conservative. If you prefer to keep your capital safer, but with a lower return.
- Moderate. When you are between a risky profile and a conservative profile. You will be interested in receiving more profitability but without taking too many risks.
Learn investment basics
You don’t need to become an expert, if you don’t want to, but it is advisable to be familiar with terms such as risk, liquidity, profitability, etc…
It is important that you learn the basic financial terms used in the world of investments. This way you will understand what financial advisors or financial newspapers are talking about.
This will also take you to the next step: thinking and learning to read numbers. Thus, before investing you will know whether an investment is really worth it or not, according to the numbers.
Plan according to your goals
At present, accessing very short-term speculative investments, but with a lot of risk, is easy. But this does not mean that it is advisable to do so.
If you have decided to invest, do it wisely and plan. Do not get carried away by the ambition of “easy money” and the fashions of the day.
In the world of investment nobody knows what is going to happen, we must be patient to prevent fear of market fluctuations and our greed from leading us to make emotional decisions.
In this Expansión.com article , you can find some tips for planning investments.
Decide how much money you want to invest
If you have decided to invest because you have some savings, perfect. But now the questions you will probably ask yourself are: how much money to invest to start? all my savings?
Investing one amount of money or another will undoubtedly make a difference both in your current and future financial situation.
Therefore, to determine how much money you should invest, I recommend you take into account your income and your frequent expenses. This difference is what you could allocate to investment. Also, if you think that you will need that money in a short time, do not invest it.
In other words, it is advisable to invest only the money that you will not need in the short term.
Think long term
The instability of the markets is much more noticeable in the short term, constant ups and downs are observed. However, in the long run, there are more likely to be more ups than downs.
Therefore, it is more likely to obtain good results in the long term.
Diversify your investments
One of the recommendations of investment experts to reduce risk is: diversify.
Diversification is about putting your money into different forms of investment. I’ll explain it to you with an example:
Imagine that you have 15,000 euros and you decide to invest them in shares of a company, but after a year the company closes, you lose all your investment. However, if you invest those 15,000 euros in 5 different projects, if after a year one of them fails, you will only have lost part of your money and the rest will give you benefits.
This is why investment funds have become an effective instrument for investors looking to diversify. For example, a variable or mixed income investment fund will allow you to buy shares of several companies, in this way the risk is reduced; by not depending solely on the results of a company.
Seek advice from a professional
I have already told you before, to invest you do not need to become a financial expert. Of course, you can always train and investigate to expand your knowledge.
In any case, if you are new to the world of finance, I recommend that you seek professional advice from financial managers. This person will guide you in making your financial decisions, but he remembers that the responsibility for the final actions is yours.
eye! Not just any adviser. You must look for a reliable intermediary, authorized and registered with the National Securities Market Commission (CNMV).
Where to find these professionals?
The most common is to go to the office of a personal manager . These experts will guide you to find the best investment options for you.
But there are also online investment platforms (robo-Advisors or automatic managers), which are responsible for automatically finding and managing the best investments according to your profile. A good example is Finanbest that uses this investment model. In addition, it is a safe investment platform since it is an independent Securities Agency regulated by the CNMV and the Bank of Spain, and is attached to the Investment Guarantee Fund (FOGAIN).
You can define your investor profile in Finanbest and see the most profitable fund portfolio for you. Free and in just 2 minutes , you just have to click here .
Consider the expenses you will have when investing
You are not going to like what I am going to tell you, but it is like this: Investing has a cost .
Before investing, you need to know what expenses you are going to have to cover.
On the one hand, if you have decided to invest through an expert, you will have to pay the fees for their services .
Normally investment managers have two ways of charging: it can be a fixed fee or a percentage of your securities portfolio. While investment platforms usually apply management fees that are deducted directly from the profitability of the funds.
On the other hand, we must also take into account the taxes applied by each State on the profitability of investments.
In Spain, for example, investment funds are included in the annual income tax return, as income from savings (specifically in capital gains and losses). In addition, they are only taxed when you have requested reimbursement from the fund. The tax rate that is applied will depend on the section in which this capital gain is located.
Knowing that these costs have a direct impact on your final profitability, my recommendation is that you take the time to compare the rates and commissions that they offer you.
Do not trust investments with safe results.
Investments without risk do not exist.
The world of investments is very unpredictable. No one can guarantee you a return without risk. In fact, return and risk go hand in hand. The higher the risk in an investment, the higher the return that can be obtained in the long term.
So do not believe when they tell you about investments with high and safe returns. Beware of any kind of scams .
On the CNMV website you can find a list of “Entities and persons that are not authorized to act in the securities markets (financial bars)”, click here to see this list. NEVER trust strangers who want to advise you on investments and check this list.
Do not invest in what you do not understand
There are different financial instruments, some are simpler than others. But if you don’t understand what any of them consist of, avoid it.
DO NOT commit your money to complex investments that you do not understand.
I hope you have read these recommendations carefully and achieve success when you invest your money