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The low-interest rate on savings since the financial crisis means that many savers have moved to markets hoping for a better return. Investing means risking your money. This is not necessarily bad – more risk could mean more returns – but if you’re going to invest you have to be prepared for the fact that you may lose some or all of your savings.
Before you invest, it is important to determine your money and make sure that your necessary guarantees are present.
Pay your debts
Be sure to repay your debts. The cost of your debt – in interest payments – is likely to exceed the returns you receive from investments.
Focus on reducing your debt to a level where it is easy to manage, or better to pay all before you start investing.
Think about retirement
It may not be enough for the state pension to cover your life needs after retirement. It is, therefore, necessary to start saving from your salary as soon as possible.
Make sure to contribute to the pension system for private employees or pensions Before investing any money, pension savings benefit from employer contributions and generous tax breaks.
Get income insurance if you are working for your own account. Other guarantees, such as serious illness insurance, may also be an option if you have a mortgage or credit, although this may be costly.
Life insurance is a key element you need to take before you invest, especially if you own a family. Your business may offer you the benefit of “death in service” but think of an additional policy if you change or resign from your job.
Make sure you have your savings
Do you have surplus money? Before risking an owner, you need to have basic savings; the emergency financial resources of unexpected events. The generally agreed rule is to have a salary of at least three months as savings before starting an investment.
Now that you have finished preparing for the investment, you should ask yourself – as a new investor – some questions, such as:
What are your financial goals?
Set clear goals. Do you just want to increase your money?
Or do you want a regular salary?
Is there a specific amount of increase you want or lower income you want to achieve?
Having specific goals will help you decide what risks you should take to achieve what you want.
You may not have a specific reason to invest, but try to make sure you want your owner to achieve it.
What is your timeframe?
When you know what your goals are, find out how much time you need to achieve. This will give you a clear idea of the return rates you need from your investments, and whether your goals are realistic or not.
It is important to put the various factors – such as your age and health – into account. If you have short-term goals (for less than five years) you have to commit to saving; because if your investments fall, you may not have time to recover your losses before you need money.
Medium-term goals (five to ten years) and long-term goals (ten years or more) are appropriate for investment, but some investments become inappropriate as you age.
You will have less time to recover money when the value decreases, and if you retire your ability to profit diminishes.
Did you understand your attitude towards risk?
Understanding the risks you face when investing and identifying the risks you intend to take is essential.
You may have a long period of time and a lot of money is based on it, but if you do not think you may sleep comfortably when markets are volatile, the big risk may not be right for you.
Can you invest?
Be realistic about your ability to invest. Evaluate all your obligations, such as debt, insurance premiums, pension contributions, savings, and living costs, to see the surplus money you can invest in.
The best time to invest is when you have a long-term view, so keep the money if you think you might need it in the next five years.
Have you asked for financial advice?
Many investors make their own decisions without resorting to advice. But doing things yourself requires time, knowledge and confidence.
If you take financial advice, you will be able to talk about all of the above points and ensure that your investments suit your needs perfectly.
How do you deal with the risk of investing in stocks in a smart and deliberate way?
An important question for everyone who works in the stock markets and wants to not lose, especially since there are major economic events that are exposed to the international economy, these changes occurred after the huge financial crisis, which caused the shares of companies suffered significant losses.
One of the most accurate answers to a question is how do you deal with the risk of investing in stocks without losing? Is to vary in stocks that you own, that is, you do not put all the eggs in one basket, but there are trustworthy investment funds without any risks.
But to be safe, you do not put your investments in a specific sector or region. For example, there is the UK investment fund Vand Smith Equity, which invests about 65 percent of its own investment funds in the United States, In different sectors. On the contrary, Scottish investment fund Scotch Mortage invests in America only through only 28 percent, namely investment in the technology sector, and the rest of the investments are distributed to other sectors. This is a successful plan, provided that a successful choice is made for the investment sector