6 rules that every novice investor should know

Where to invest money?

So you decided to do investing. The first question that arises from each novice investor, where to invest money and which investment method is the most profitable?

Investment methods are different:

  • Deposits in the bank.

One of the most common types of investment. You put money into a bank account at a percentage. At the expiration of the term you are paid interest accrued. The biggest risk is to not get any profit. At the same time, you are unlikely to make at least something to earn. Inflation growth usually exceeds the bank rate. Therefore, bank deposits  are good only for keeping savings.

  • Investments in currency.

One of the most convenient ways to try yourself as an investor. Since you do not need a large starting captain and will be enough basic training. It is very difficult to make forecasts in the foreign exchange market, since the value of currencies depends on many factors. In most cases, even experienced players in the global currency exchange market cannot do this. The whole secret is to evenly place money in different currencies. Thus, if you lose on one currency, you will win on another.

  • Investments in stocks and other securities.

This method is considered one of the best ways to invest. Nevertheless, here you will need specific knowledge and a sufficient amount of time to follow the news and react in time. This is a risky, but very profitable way to invest. In addition, if you do not want to delve into the whole process, you can simply entrust your money to a broker. The main thing is not to make a mistake in finding a professional.

  • Investment in MFIs .

Investments in microfinance organizations are a rather new way of investing money for the Russian market. The attractiveness of investment is that you can earn from 10 to 26% per annum without any special risks. The only thing that requires a large enough capital. According to federal law No. 151, the minimum threshold is 1.5 million rubles for one loan agreement between the MFI and the investor. The risk consists only in the fact that the state does not insure such deposits .

Kredito24 offers a new product: investing in the microfinance sector . The size of investments can range from 1,500,000 rubles (with an interest rate of up to 29% per annum).

  • Investment in precious metals.

Precious metals have always been a symbol of wealth. They are still considered one of the most reliable ways to invest money. Certain advantages are that the price can only fall to a certain level, and, moreover, precious metals are always easy to sell. However, this is not the most profitable way to invest. It is usually used by investors only to wait out a crisis. This is what usually causes rising prices for gold and other metals during times of economic recession.

  • Investments in mutual investment funds or mutual funds.
Where to invest money?

In this case, you trust your money to a financial institution, which itself forms a financial portfolio of various financial instruments (stocks, bonds, and other securities). You can buy a share in their portfolio or share. This is a rather risky and profitable way. The advantage is that you do not need to keep track of all the news of the financial market and make decisions about the purchase or sale of securities.

  • Investment in real estate.

Real estate has always been considered one of the most profitable investments, but this type of investment is not for everyone. First, it requires a lot of capital. Secondly, it will take a sufficient amount of time before your investment pays off. Therefore, this method is more suitable for wealthy investors.

So, we got acquainted with the most basic ways of investment, but this is not all. Of course, to become a successful investor you need knowledge and experience. Nevertheless, there are investment laws that every novice investor should be familiar with.

6 basic rules for investing

  1. Do not keep all eggs in one basket.

Do not invest all the money in just one financial instrument. The more you diversify, the less you risk. Although it is not the most profitable strategy, it will save you from total collapse.

  1. Do not think that you are lucky.

If in investing you decide to rely only on your intuition, you are likely to lose everything quickly. Great investors did not become so just because they were lucky. You must have an investment strategy and goal. You need to carefully evaluate all the risks and opportunities to earn. Trust logic and theory better than your feelings. This is the only way you can succeed.

  1. Think of your strategy.

Learn from experts and investment geniuses, but don’t copy their strategies. No one can guarantee you a profit. Today, the investment market offers too many options, and the world is changing too quickly. Therefore, no one can give you a ready-made recipe. What worked in one situation may turn out to be a failure in another. Try to develop your own strategy, which will lead to the success of you.

  1. Invest in what you understand.

Do not be fooled by promises to get rich the next day. The decision to invest money should be taken deliberately. As the famous investor Warren Buffett said, “Do not invest in areas that you do not understand. Investing in a business that you are able to understand is much more profitable. ” Remember, the more you know, understand and analyze, the higher the chance to make the right decision.

  1. Do not invest the last money.

Proper investment, in the first place, implies that you have foreseen all the consequences of a failed investment. You should always have an untouchable financial pillow for a rainy day, which will help you to survive for at least 2-3 months, without any income. For a novice investor to invest the last money – a very risky event.

  1. Choose the optimal level of risk and return.

Usually, the more earnings from investments, the higher the risk. You have to decide for yourself, take risks, but be able to make high profits in a short period of time, or have a stable but not very high yield.

The ability to properly invest money is part of financial literacy , without which it is difficult to become successful. Goals, strategies and financial instruments may be different, but if you find your approach and learn how to properly apply your knowledge, you can earn on everything.

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