Before dealing with the personal investment strategy, many people have great respect. This is understandable, since it is a decision of great importance. But with simple considerations, you can arrive at your tailor-made investment strategy without a headache.
Why should you even make investments?
If, in addition to all necessary expenses and the iron reserve for the unforeseen, you still have additional money, it is advisable to invest this profitably. Excessive money that does not yield useless. A sophisticated investment strategy can provide you with additional income that will create scope for investment, investment or even retirement in the future.
Which systems are useful?
There are numerous plants. Everyone has their advantages and disadvantages. Stocks can rise sharply and also make an interesting dividend, but they can also lose value as well. Account money, medium-term notes or bonds from companies are currently no longer yielding, but are very stable. But before you decide which investments you want to invest in, you need to be aware of what type of risk you are – risk-averse or risk-averse?
What risk appetite do you have?
The value fluctuations of an investment are called investment risk. But how do you personally agree with this rather abstract technical term? Here the experience from the everyday life can give valuable hints. How do you personally react to risk? For example, if you stop parking to go to the bakery quickly, are you nervous or does that leave you cold? Have you ever forgotten to solve a ticket on a train ride – what was your reaction?
If you are one of those people who are not immediately nervous, you usually harden fluctuations in the value of your investments. However, if you quickly get scared that something bad might happen, we strongly advise against risky investments. No amount of profit prospect justifies bad night’s sleep. Very risk-averse people do not come around to leave their money in the account, even if it currently does not yield interest.
Which risk can you afford?
In addition to the question of which risk you are, it is also important how much risk you actually carry objectively. If you need to access the money again at any time, you can not risk fluctuations in your investment value. In this case, we do not recommend any risky equipment.
On the other hand, for example, you can invest your pension more risky in 20 years, the fluctuations should balance out over time. For example, stocks that have fallen sharply may rise in value in a few years’ time. So, if they are sufficiently risk-tolerant AND risk-tolerant, you can consider different investments.
What is your optimal investment mix?
As in real life, you should not put everything on a map even with investments, because you can lose it in the worst case, everything. The distribution of risks in investments is called diversification. Depending on your risk appetite, you should make several individual investments of different asset classes (equities, bonds, etc.). It may also be interesting to consider more specialized investments such as commodities or loans. A rule of thumb is to invest your money evenly in at least 10 different stocks or types of investments, from 20 different positions you are already very well diversified.
Finally, a very simple rule that protects against frustration and damage: Invest only in facilities that you understand and feel comfortable with. Again, it is like in real life; They are competent and successful where they can rely on experience and knowledge – everything else is an adventure that can be seen.