Everyone is always wondering how to invest profitably. Simply saving money is not a bad approach. However, it’s still better to let it grow. If you wish to make money with your own funds, it makes sense to learn how investing works and how to make smart investment decisions.
Investing is an act of allocating free funds to different assets for the purpose of generating profit. Investing is an excellent way to make money. Basically, you let money work for you.
By making smart investment decisions, you can be confident about your financial future. By investing, you become an investor. In a nutshell, the investor is an individual who allocates funds expecting the financial return in the future.
Ok, we are done with the basic terminology. There's nothing complex here. Moving right along.
Is investing a chance to make money or preserve it? Generally, it depends on the purpose and the assets you invest in.
Real estate. This is one of the most common ways to invest. Leasing is among the popular investment options. But to be able to invest in real estate, you need a substantial capital.
Bank deposits. Basically, it means keeping money in a bank and earning interest. Choose the bank wisely, ensure the safety of your deposits, and define the investment term. The downside of this investment option is that the income is typically very low, and there is a lack of trust in financial institutions.
Currency. Simply saving foreign currency is not profitable because the inflation will eventually “chop off” a portion of the accumulated funds.
Gold. It is a reserve asset. In stable economic conditions, the price of gold does not go up but always remains fairly high.
Keep in mind that when we are talking about gold, we mean gold bars and not the jewelry.
As far as jewelry goes, only exclusive pieces that have an interesting history behind them do not lose value.
Own business. Are you scared to invest in someone else? Invest in your own business. However, before you do, make sure to calculate and mitigate all the risks. The downside of this investment tactic is that you really have to be a good manager first and tackle accounting on your own in the beginning.
Securities. Stocks and bonds have high liquidity. Trades involving securities do not require astronomical expenses. That said, you will have to constantly analyze the market in order to know when and what is better to buy or sell at a given time.
Evidently, there is plenty of investment options. All you have to do is pick one that works best for you. Another way is to invest in trust management.
All the investment types described above have their own drawbacks: high entry threshold (real estate), regular monitoring of the situation (financial markets), high risks (own business), and low profit (bank deposits).
That being said, there is another way to invest and make money through investing. That is trust management. PAMM accounts are a service you can make a profit with, without having to trade in the financial markets on your own. Investors invest their money in traders who receive remuneration based on the profit made in the course of trust management.
Investors, who wish to get more guarantees, opt for TIMA accounts. This is an improved type of trust management that the Risk Manager is connected to. It helps minimize the risks when trading in the financial markets.
You can pick a manager from the TIMA Account Rating by evaluating his/her trading performance, the lifespan of the strategy, the amount of money managed and other indicators. By the way, the trader’s funds are equally involved in the process which serves as an additional guarantee of the manager’s diligent approach to trading. Moreover, there is a small entry threshold here.
Once you have figured out what investing is and tackled the theory, you can proceed to investing. To make this process easier for you, we have made a small step-by-step guide.
1. Financial opportunities. First off, calculate your revenues and expenses. If your revenues exceed the expenses by 10% only, it does not make sense to start investing because it won’t be profitable enough. Analyze the figures and see where you can cut your expenses before you embark on the investment path. And do not forget about the financial safety net in case of any unforeseen expenses.
2. The risk. Determine the risk you are willing to take when investing. Your first investments should carry the lowest risks.
3. Strategy. When it comes to finances, having an action plan at the ready is essential. Criteria you should pay attention to when developing a relevant investment strategy are:
4. Get started. Stick to the plan and do not exceed calculated risks, keep a close watch on the ever-changing market situation or let a professional handle the capital management for you instead.
Don’t forget that by investing you can make money work for you and produce returns. But to make it happen, you need initial capital and a desire to earn.
Investing is becoming increasingly popular among young adults and older, more experienced people. You have to admit that having an additional source of income is always a good idea.