Principle 4. Choose the right tools at the start
You can, of course, immediately buy stocks or even bitcoins, but what this approach will lead to. Most likely to losses. You need to start with a basic investment, and it doesn't have to be a bank deposit.
For a start, many advise choosing government bonds. It is safer than stocks or corporate bonds, but also more profitable than a regular deposit. Next in terms of reliability are corporate bonds, especially public corporations.
To continue, you will have to learn how to use technical and fundamental analysis. Fundamental analysis, in simple terms, is an assessment of a company based on its news and its reports. If a company plans to lay off 5,000 employees in order to lower its paychecks, we don't think it's worth investing in such a company.
Principle 5. Have a financial cushion
Having an airbag is a key investment principle. It is impossible to talk about any investment without an airbag. You just can't invest if you haven't saved some money. You will be worried that you have invested the last money, or you will simply slowly pull money out of your investment portfolio, especially if you have not provided for yourself an “insurance fund”, which we have already written about.
How many stories we hear and see about would-be investors who put their last money into some financial instruments that are actually fraudulent. This approach to personal finance is only possible due to a lack of financial literacy. But also due to the fact that the last money is being invested.
Investments are not some big jackpot that is ripped off once in a lifetime and then you live happily ever after. Maybe I'll upset someone now, but investing is the same job. Do not trust beautiful pictures, at first you will have to figure out and work on investments, especially if you are starting from scratch. And only then, when the capital already starts working for you, and then not by itself, but with your involvement, you can calmly breathe out and understand that all your efforts were not in vain.
But once again - this requires a very good job now. I started my way to investing about 10 years ago, and I have never regretted my time or money invested in my knowledge, everything paid off and will pay off further.
Total
These were the 5 investment principles that any aspiring investor should follow.
If you need to prepare to comply with them:
- learn how to assemble an airbag
- understand how to set financial goals and manage your money
- learn how to keep costs under control
- understand how to turn daily savings into a habit