If you are a first-time investor and don’t know how to get started, this guide will help you create your path to financial freedom.
Dear first-time investors, we already know that entering the world of investments generates massive financial gains and endless uncertainties when it comes to getting started.
2020 was undoubtedly a challenging year. The world economy has been affected, affecting investors’ plans and increasing the fear of the first-time investor start to invest.
“Don’t be afraid to give up the good to go for the great.”John D. Rockefeller
Many people enter the financial world thinking that fortune – and that those famous anecdotes of great investors – are made overnight.
But, the reality is different. To invest, you must have very specific qualities because not everyone has the skills and control to make good decisions when it comes to money.
When determining if a first-time investor has that entrepreneurial spirit, attitude will be everything. Investing means being patient, disciplined, and risky.
Believe it or not, investing is putting your money to work, and it is an effective tool to boost your capital.
The following list will help to guide you as a first-time investor:
1. Establish the investment criteria (profitability goals and objectives).
Investment criteria are the objectives that you define as you are capitalizing on a project or investment. What do you want to invest in? What type of investor are you? What is your capital to invest?
The first step is deciding the investment profile you want. Draw up a strategy and know where you want to go and the ideal timeline to achieve it. Think about the play!
2. Start Investing in an Investment Fund or Portfolio:
An investment fund or Investment Portfolio is an instrument that helps small and medium investors to channel their savings into the stock market. Investing is for everyone!
It consists of grouping all resources (money/capital stock), intended solely and exclusively for investment, to generate higher returns.
There are four (4) types of Investment Funds or Portfolios:
a) Variable Income Funds: Funds that invest in shares of companies listed on the stock exchanges but still not being sure of what the future behavior of their income will be.
b) Debt investment funds: (Credit title that covers a loan) Funds that invest in fixed income instruments issued by companies or governments. Interest is received periodically.
It is essential to review the historical returns of this type in the market before you start investing.
c) Capital investment funds (FINCAs): these funds invest in private companies that need capital to finance their operations, and the returns are given in the long term.
d) Limited objective investment funds: these are funds invested only in financial instruments established in their bylaws.
3. Always attentive to commissions and risks:
Like any first-time investor, you should review the commissions that you will have to pay in terms of purchase, sale, and administration according to the investment channel you choose.
Performance is often thought to be what you can put in your pocket. However, you have to subtract the commissions.
Investment funds, almost always, charge an annual commission for all the processes carried out. These commissions are usually lower when the number of investors is greater.
According to the National Commission for the Protection and Defense of Users of Financial Services (Condusef), all investment funds have a risk.
The risk will depend on the vulnerability and rating they have in the market. Performance is not guaranteed, so it is essential to watch your portfolio constantly.
4. Look for valuable allies:
When beginning to invest, you must determine all the scope objectives and factors you want to examine in your investment together with a financial advisor.
They are a valuable ally when making decisions and looking for the right horizon for your investments.
An advisor can give specific answers and clarify the doubts that arise along the way.
They can also help you build an investment portfolio: stocks, investment funds, risk tolerance, investment terms, financial goals, among others.
Last but not least, invest only with financial intermediaries that have the correct authorization and are regulated by the National Banking and Securities Commission (CNBV).
You have heard the famous phrase from Warren Buffett Don’t put all your eggs in one basket! Well, if the basket falls, you run the risk of losing everything.
Having multiple sources of income is a wonderful idea and the best way to be financially secure. This concept is key to the world of first-time investors.
Creating a portfolio with different types of risk will give the perfect balance to your money, accompanied by security and profits.
Investigate all the options and possibilities within your reach, and make sure they are for you!
6. Invest for the long term:
When possible, opt for long-term investment option in stocks, either for retirement or the business you’ve always wanted to have.
Your goal is to manage money properly to ensure your future.
7. Constantly learn about financial education:
There are countless sources of relevant information and information platforms in the financial area for all investors.
Creating the habit of learning is a healthy step for your personal finances and guidance to achieve all goals.
Remember that the market is very volatile; you must train and constantly inform yourself about what is happening in the world concerning the stock market and finance.
8. Discipline and patience:
These are the most powerful qualities that every investor can have.
Never despair! Being a good investor requires a lot of patience and discipline to be aware of all the market variables and how you can invest.
The world of investments is an infinite field of possibilities and constant exploration.
My dear First-Time Investor! All possibilities are open to you in the foreign market.
Take advantage of that extra money, adapting your financial and investor profile to the current market.