Tip 1: Buying shares or another form of Fund?
Asset management is the most accessible for novice investors. You can have your assets invested there and then outsource the buying and selling of shares. Investing for beginners is therefore no longer difficult.
You can also spread over multiple strategies or services. For example, you buy shares yourself and outsource some to an asset manager. Another option is to buy broadly diversified index trackers or funds in addition to your own chosen shares. You are, therefore, less dependent on the profit or loss of your strategy.
Tip 2: Make an investment plan first
Most people buy and sell shares themselves because they like it. It is an essential factor in investing yourself or having them invested. But it is precise with these investors that the danger lurks that a good long-term investment plan is missing.
Many people start investing to earn more than the interest on savings, but then start investing without a goal and a precise long term. That’s a bad plan!
At a minimum, your plan should meet the following:
- You have a concrete investment objective.
- You invest for the longer term.
- You have determined your (periodic) contribution.
- The available amount does not have to be used in the coming years.
- You have sufficient financial buffer for unforeseen expenses.
- You have determined when or why you will sell again.
To earn with shares, you naturally want to sell for a higher price than you bought. But in practice, timing the right buying or selling moment raises many questions for investors. By determining your investment plan, you can decide what reasons would be for you to buy and sell shares.
Don’t have an investment plan yet? You can easily create a successful investment plan with the five steps from this eBook.
Tip 3: Gain knowledge about buying shares
Basic knowledge is necessary before you buy shares. What exactly is a claim? How do you determine the value of the share?
Many online brokers allow you to use fundamental analysis. For example, you can use this to determine the value of a share. And using the technical analysis offered, you can interpret graphs, for example, to choose your buying or selling moment. If you are unfamiliar with this, such information will come to you immediately. How do you use these analyses?
Below are some suggestions where you can gain knowledge:
- The book “The Intelligent Investor” by Benjamin Graham. According to Warren Buffet, the most successful investor ever, this is the book you must read to be able to invest. The book teaches that your character and attitude determine the money you make. Your behavior during stock market fluctuations can cause you to make or lose a lot of money.
- The book “Common Stocks and Uncommon Profits” by Philip Fisher. Morningstar calls him one of the best investors ever. Fisher describes, among other things, a 15-point model for assessing the potential of a stock.
- With the book “Investing for Dummies,” you can quickly acquire basic knowledge about investing.
- In the Netherlands, IEX.nl is the best-known website for financial news and background and share price information. Here you will find more information about mainly Dutch shares.
- Finally, an investing course is also an option
Tip 4: Know which products you buy
which stocks to buy? Invest in products and companies you understand. A wise lesson from Warren Buffet is, “after you think, then think again.” He states that if he can’t write down different reasons for buying the stock on a piece of paper, he doesn’t believe the stock.
The same applies to the choice of the type of product. At a broker where you buy shares, you often also have the option to invest in options, turbos, CFDs, or futures. You can use these products to increase your potential return or go short. But don’t be tempted too quickly. These products also entail additional risks. Only sponsor products you fully understand and for which you can think of good reasons.
Tip 5: Spread your risk
We often see it happening in practice; investors who state that they do not want to take too much risk but, in the meantime, invest in only one or a few shares of companies. Even when it comes to a stable oil company or a large bank, we still speak of a hugely offensive or speculative investment portfolio in this case. In comparison: professional asset managers put together a much more diversified portfolio. For example, an average risk profile usually involves 50% equities and 50% bonds. And the portfolio is also spread worldwide over at least ten, but usually hundreds of underlying companies.
Some companies pay an excellent and stable dividend; part of the profit goes to the shareholders. You can generate an income stream by paying the dividend to your contra account. But don’t forget that these shares can still have a declining price. You always run a price risk. You can reduce this risk by spreading it.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.