Do you want to benefit from your savings? Do you want your money to start working for you? Did you decide to invest? !! Congratulations!! Undoubtedly, it is a decision that will change your life and your financial situation.
There are different options to invest money and if you do not have experience it is likely that you are somewhat lost ... But avoid worrying. In this post I am going to share some recommendations that you should pay attention to before starting in the investment world.
Be clear about what type of investor you are
Before investing, it is essential that you determine your investor profile. For this, it is essential to know your current financial situation, your financial goals and when you intend to achieve them, your tolerance for risk 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 achieve greater profitability.
- Conservative. If you prefer to keep your capital more secure, but with lower profitability.
- 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 the basics of investing
You should not become an expert, if you do not intend, but it is advisable to be familiar with terms such as risk, liquidity, profitability, etc ...
It is essential that you learn the basic financial terms used in the investment world. Thus you will understand what financial advisers 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 how to assess whether an investment is really worth it or not, according to the figures.
Plan according to your goals
Nowadays, having access to 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 decide to invest, do it wisely and plan. Don't get carried away by the ambition of "easy money" and the fashions of the day.
In the world of investments, no one knows what is going to happen, you have to be patient to prevent fear of market variations and our greed from leading us to make emotional decisions.
In this post from Expansión.com, you can find some tips for planning investments.
Decide how much money you intend to invest
If you decided to invest because you have some savings, perfect. But now the questions you are likely to 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 financial situation and in the future.
Therefore, to establish how much money you should invest, I suggest you pay attention to your income and your frequent expenses. This difference is what you could use to invest. At the same time, if you think 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, there are constant ups and downs. Regardless, in the long run, more ups and downs are more likely.
Therefore, good long-term results are more likely to be achieved.
Diversify your investments
One of the recommendations of investment experts to reduce risk is: diversify.
Diversification is about putting your money in different investment alternatives. I explain it to you with an example:
Imagine that you have 15,000 euros and you decide to invest it in shares of a company, but after a year the company closes, you lose all your investment. In spite of everything, 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 they have become an effective instrument for investors who want to diversify. As an example, a variable or mixed income investment fund will allow you to buy shares of several companies, from this dynamic the risk is reduced; by not depending solely on the results of a company.
Seek the advice of a professional
I've told you before, to invest you don't need to become a financial expert. You can definitely always train and do research to expand your knowledge.
Regardless, 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 financial decisions, but remember that the responsibility for the final actions is yours.
eye! Not just any advisor. You must look for a reliable, authorized and registered intermediary 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 alternatives for you.
But there is also online investment platforms (robo-Advisors or automatic managers), who are in charge of automatically searching and managing the best investments according to your profile. A good example is Finanbest that uses this investment model. At the same time, it is a secure 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 establish your investor profile on Finanbest and see the most profitable portfolio of funds for you. Free and in just 2 minutes, you just have to do Click here.
Consider the expenses you will have when investing
What I am going to tell you you will not like, but it is like this: Investing has a cost.
Before investing, you want to know what expenses you will have to cover.
On the one hand, if you decided to invest through an expert, you will have to pay the fees for their services.
Investment managers typically have two alternatives for payment: it can be a flat fee or a percentage of their portfolio. While investment platforms usually apply administration fees that are deducted directly from the profitability of the funds.
On the other hand, you also have to pay attention taxes applied by each State on the profitability of investments.
In Spain, by way of example, investment funds are included in the annual income tax return, as an income from savings (particularly in capital gains and losses). At the same time, they are only taxed when you have requested the refund of the money from the fund. The tax rate that is applied will depend on the tranche in which this capital gain is found.
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 sure results.
There are no investments without risk.
The investment world is very unpredictable. Nobody can assure you a profitability without risks. In reality, profitability and risk go hand in hand. The higher the risk of an investment, the higher the long-term returns.
Therefore, do not believe when they talk about investments with high and safe returns. Beware of any kind of scam.
On the CNMV website you can find a list "Entities and persons that are not authorized to act in the stock markets (financial chiringuitos)", click Click here to see this list. NEVER trust strangers who want to advise you on investments and consult this list.
Do not invest in what you do not understand
There are different financial products, some are simpler than others. But if you don't understand what any of them consists of, avoid it.
DO NOT commit your money to complex investments that you don't understand.
I hope you have read these recommendations carefully and achieve success when investing your money 💪