When people hear about investments, they think of something complex to manage, something difficult, something “for a select” and trained few. Most people do not think that, even for them, it might be a good idea to start investing their money and savings in something.
But it is not. Investing can be within everyone’s reach and less complicated than it may seem.
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Why start investing?
Inflation reduces the purchasing power of your savings. For example, if you leave 20,000 euros in a checking account and average inflation is 2 percent, that 20,000 euros will be worth much less in 10 years. Investing can help you grow your savings and protect them from inflation.
For beginners, starting to invest in stocks may seem daunting, but it is not. One affordable way to do this is to use Exchange-Traded Funds (ETFs).
ETFs are financial instruments that offer an easy way to invest in a variety of stocks with a single purchase. They are a suitable choice for beginners who wish to diversify their portfolio.
When is the ideal time to invest
The best time to start investing is now. Steady monthly investing is an effective way to slowly build your portfolio, regardless of the initial amount. In an environment of rising inflation, waiting means losing money.
A basic principle of investing is diversification. This means dividing your investments among different assets or sectors. Diversification reduces risk and can improve profit opportunities. Be sure to balance your portfolio to include a variety of assets.
Where to consider investing
Stocks represent ownership in a company. When you buy stock, you become a shareholder and are entitled to a share of the company’s profits. Stocks are bought and sold on the stock market.
Bonds are debt securities issued by government agencies or private companies to raise money. People who buy bonds become creditors and receive interest. Bonds can offer regular income and be less risky than stocks.
Investing in real estate, such as houses or apartments, is a common option. Real estate investment can generate rental income and appreciation of property value over time.
Cryptocurrencies, such as Bitcoin and Ethereum, are digital assets. Investing in cryptocurrencies is suitable for those who are willing to endure the volatility and complexity of this emerging market.
How to start investing from scratch
Regardless of experience or starting capital, there are three basic steps:
- define financial goals, start by defining your financial objectives. These goals will be the basis for developing your investment strategy. Consider goals such as inflation protection, retirement planning or funding your children’s education;
- doing effective financial planning is crucial. It must be based on income, expenses, fixed and variable costs. Effective financial planning will help you identify areas where you can save and invest;
- diversify investments, diversification is crucial to reduce risk. This can be achieved through diversification geographically, over time, and among different types of assets. Diversification increases security and opportunities for returns.
When and how much to invest
No matter how much you own, start investing as soon as possible. Consistent monthly investing is an effective way to build your financial future. Foresight is key: invest now to ensure a more secure financial future.
Investing is not an activity reserved for the wealthy or Wall Street professionals. It is accessible to everyone, even those starting out with modest amounts, and there are many investment opportunities that you may not yet know about.
Diversification, study and financial planning are keys to success. Start today to ensure a stronger financial future.