Investing is nothing more than allocating money to an activity that allows you to generate profits. It’s making money work for you so that your wealth grows larger over time.
Investments also help the money you have saved not lose its purchasing power. If you only keep having your money on your account, what you are doing is losing it, and this is due to inflation.
Year after year, goods and services become more expensive and, if the money from savings is not invested, the next few years, you will be able to buy less with the amount you have.
However, investing is a decision that must be made with a cool head. Depending on what activity the money is placed in, there are risks, and one of them is losing it. But do not worry! Here are the first steps to invest your savings money responsibly.
Ask yourself what kind of investor you are
The success of an investment plan depends on knowing yourself. Our personality, lifestyle, and goals give us a guide to investing.
There are three types of investors, depending on the amount and type of risks you want to take. The first is the risky investor, who opts for investments with higher risk, but that generates higher returns. People with this profile are not afraid of losing money in the process.
The second type is the conservative, who prefer security over high returns in short periods; These investors are unwilling to lose money and therefore tend to generate lower returns.
Finally, the moderate investor is characterized by having a balance between risk and return.
Understand the basics
Financial education is essential not only to start investing but also to take care of your finances, so we recommend studying it.
Two concepts that you must become familiar with when investing are risk and return. For its part, the risk is the uncertainty surrounding an investment due to unexpected situations and changes. In contrast, profitability is the percentage of profit generated by capital investment.
These two concepts have a direct relationship. The greater the risk, the greater the profitability, and the less you risk, the less the expected profitability.
Before investing, you must establish the amount and the profit and loss limits.
Make an investment plan for a specific time. In this step, you must choose the term of the investment. You should decide if you want to invest on your own or leave it in experts’ hands and select the activity you will invest in.
There are different types of investments. On the one hand, you may have a very good business idea and decide to invest your savings in a startup. You can also invest in startups and receive a return for it.
On the other hand, there are financial products, such as stocks, bonds, currencies. Before investing in such products, consult directly with financial institutions, such as banks or investment funds.
Having an individual plan, along with the steps mentioned above, will help you be more confident when investing. Ensure you do your research and take good advice before you start to feel comfortable with your investment.
- Trading Instrument
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!
View original post