Investment: 9 best practices

We strongly recommend that you mature your thinking before investing in real estate, the stock market or any other financial asset. Here are 9 tips to help you put money in the financial markets.

Don’t invest in things you don’t understand

A well-informed investor is someone who understands the characteristics of a solution or financial product, especially if it suits you. Before signing, Think carefully about the pros and cons and take the time to read the disclosure documents. If the funding is simple and what they offer is too complex, do nothing. If you do not know the basics of the stock market, avoid going there. If you know nothing about NFT or cryptocurrency, avoid it.

Consult an independent professional

There are so many investment offers and advertisements that it’s hard not to jump into them by accident. But be careful, investments are always at risk, and that’s better seek the help of a qualified person before investing your money. This can be a banking advisor, a financial asset advisor or even a legacy advisor, for example, Olifan Group.

Financial Advisor

Define your investment profile

As you may have noticed, defining the goal you want to pursue is just a starting point for moving in the right direction. How many single investors are able to set their goals, set a time horizon to achieve them and understand their risk appetite?

All these variables are intertwined and determine your “investment profile”. It is not so easy to look in the mirror and draw a self-portrait quite often. thus, the skilled hand of a trusted professional can help you adjust the lens.

Once the investment profile has been determined, the real challenge is to stay true to it, despite sudden changes in the markets that may prompt us to reconsider our choices.

Calculate your financial capabilities

To achieve your goals, you must first know what you are capable of. Know the size of your capital this is the first step to drawing up a successful financial plan. The best way to do this is to make a list of your assets and liabilities. This will help you understand whether you can reduce or eliminate your debt and improve the quality of the current asset allocation.

To help you, you need to take stock of your financial health make effective and sound financial decisions.

Teach yourself the concept of risk and profit

Risk and return are two closely related concepts when it comes to investing. We can define risk as the probability that the actual cost of an investment will differ from what is expected. As a rule, the most profitable investments are the most risky. First of all, the choice between the various available financial assets understand how much you are willing to take risks.

There is no such thing as a completely risk-free investment, because risk is the price you have to pay if you want to increase your capital. Even markets that are considered safe (real estate and gold) may fall.

investment risk

Asset diversification is the most important of all investment tips

We all know the saying “don’t put all your eggs in one basket”. Diversification is a the real rule when compiling a portfolio. Focusing all your assets on one market or financial instrument is “risky” because you remain overly attached to the latter’s fate, for better or worse.

History shows that no market, no asset class has achieved positive results in a long time. Indeed, the “best” years are always followed by particularly negative periods. In financial markets, good things always end well. There are some markets that behave in the opposite way. This applies, for example, to stock and gold markets. When one rises, the other falls.

Because it is difficult to predict who will be the winner, you can reduce the risks by dividing their investments between them. That way you will always win.

Track your target market

Do not think that your work is finished after injecting money into a financial asset or property. We are just beginning. You need to monitor and review your investments over time, taking corrective action if they deviate. Required at least once a year rebalance your portfolio to make sure you are still on track to achieve your original goals.

Over time, your propensity for volatile assets should decrease. For example, when you are approaching retirement, investing in stocks should be reduced so as not to jeopardize all the amounts accumulated during your working life. At the same time, our lives can change over time, for a thousand reasons, and new goals can emerge along the way.

Define a time horizon for your investment

“It’s better to have an egg today than a chicken tomorrow. This proverb cannot always be applied. In fact, time can be your best ally, able to reward the most patient. This is what often happens with investments in stocks that are historically more profitable than more conservative investments in bonds or cash. If you are betting on a promising young startup, you are can have a good return on investment in a few years.

However, do not rush and respect the right time frame (several years). In this way, you will give your investment the best chance to get the right return and be able to achieve your goals.

An informed investor eliminates unnecessary costs

We all know that the first way to make money is to eliminate unnecessary expenses. Contacts independent financial advisor which will recommend only the best solutions! Among other things, it will help you eliminate the unnecessary costs associated with the many financial products that the world of the financial industry offers.