Why start investing
The benefits and risks
People invest for a wide range of reasons. To provide for their retirement, to pay off a mortgage or become debt-free, to protect or correct assets, or simply to build up capital reserves, improve their standard of living and/or have the choice of retiring early. One thing is sure, where previous generations passively relied on state pensions, people are now increasingly willing to take responsibility for their own financial future.
Simply putting money aside in savings accounts is no longer enough. Interest rates are low, and if inflation is higher than the savings rate your money will not grow but gradually be diminished. This low-return environment is one of the most important reasons why people decide to take control of their savings and become independent investors. What’s more, you don’t have to become a full-time professional investor to make money this way. That said, you should always be aware of the risks of investing. There are no guarantees and your investment can shrink as well as grow.
Why invest yourself?
By choosing to invest yourself, you can influence the growth of your assets and decide how much risk you want to take, bearing in mind that there is a direct relationship between risk and returns. The best option is to start with a small amount and, unlike investing through a wealth manager, there is total freedom, flexibility and no high minimum step-in sums. Importantly, the cost of investing is also usually lower as you pay only a nominal sum for transactions and no fixed costs or broker’s fees.
Self-investors also have total freedom to choose those tools and investment options that work best for them. You can select the instruments that suit your investment objectives and align them to the risks you are willing to take.
The benefits and risks
Investing and risk are inextricably linked. If you focus on careful, ‘risk-free’ investment the returns will generally be lower. If you want high returns there will usually be an element of risk involved too. Our tip is: invest only with money you don’t rely upon. In other words, spare money you can afford to lose but want to grow. If you achieve the latter, it can become the seed capital for a growing investment portfolio that you can harvest from time to time. Beware, however, that saving and investing are two completely different forms of capital building.
Do I have enough know how?
Investing seems very complicated at first. While you do need keep an eye on the finer details, it needn’t be overly daunting. Even complex things can be reduced to their essence. If you are properly informed and prepared, you can take the first steps with confidence.
Hugo Investing offers a wealth of information and support to first-time investors with little or no experience so they are well-prepared. We also teach you about the available investment tools, the stock market in general and tips that will help you become acclimatised quicker.
How much time will it take me?
This is an important question. Some people spend more time learning, trading and understanding the different risks than others depending on their goals. If you want high returns, you should be willing to invest time learning to understand the different stock markets. Studying the details of more risky products like options, sprinters, turbos and futures is particularly worth your while.
If you are looking for a modest return, you should study financial products with a lower risk. Invest time in finding out more about areas such as shares, trackers and mutual funds. TIME and EFFORT are important to success, but understanding your trades is the key to getting returns on your investments!
Don’t hesitate to ask for more information. Let us know what you need to get going!