The decision to become an investor can be the best you'll ever make in your life. While it can sound scary at first, there are many ways to avoid common beginner pitfalls.
Here are some of the vital tips and strategies that can help you thrive and survive in the cutthroat world of investments.
Market Intelligence is Key
Before you invest your money, you need to first invest your time into researching whatever market you’re seeking to break into. Keen market intelligence depends largely on the location and nature of your planned investments. For instance, Iban market will allow you to dip your toes into credit rights attached to loans backed by collateral. And in Europe, the markets concerning credit and repo rights have a key role in maintaining liquidity between financial institutions. These markets are now a major collateral redistribution channel which has been prevalent since the mid-2000s, according to the Bank of Settlements. This simply means that the credit rights market among others could be a good investment choice for beginners to break into, as it presents a relatively low amount of risk for new players. In any market, risk is an important factor, which brings us to our next tip.
Establish and Develop Risk Tolerance
At its core, investment is about risk. In technical terms, FXCM’s post on how to trade stocks explains that risk tolerance refers to the amount of volatility the investor can accept when making financial decisions. This is different from but related to risk capacity, which in turn refers to how much risk the investor can manage without significantly reducing the odds of making a profit from a risky decision. The amount of risk you’re willing to take and manage dictates your stance as well as which markets you should and shouldn’t be considering. You can work with a financial planner to better determine whether your stance is aggressive, moderate, or conservative – this will also depend on market intelligence, investment capital, your specialization, and a slew of other factors. Understanding how to work with risk is a crucial part of being a successful investor. The more your risk tolerance and capacity develop, the better you get at making risky yet profitable decisions.
There’s an App for That
Apps have come to dominate nearly every aspect of business, and investments are no exception. Using the right app can make it easier for beginners to navigate certain investments. The Iban Wallet app for instance, allows you to make investments from your smartphone, request to withdraw funds, and instantly show you how much you’re earning over certain time periods. Likewise, outside the credit rights market, a variety of apps have different features that can make investment decisions easier – as evident by The Balance’s list of best investment apps for 2020. Whatever market or type of investment you’re interested in, there’s definitely an app for that.
Focus Now, Diversify Later
As someone new to the investment game, it would be prudent to stick to focusing on one or two types of investments rather than immediately diversifying. While diversity is good for an investor’s portfolio, it also entails managing a lot of risk, which not every beginner will be lucky or competent enough to sufficiently do. Whichever type of investment you choose, it should either be a market that you’re already very knowledgeable about, or one that has significantly hooked your business curiosity. Investing is about managing risk, and managing risk is about gaining and applying knowledge, which for beginners is more easily cultivated through focused investing.
exclusively written for ibanwallet.com
by Rain Julian