Why start investing
The benefits and risks
Why invest?
People invest for many reasons, such as saving for retirement, paying off a mortgage, becoming debt-free, protecting their assets, or building savings. Many also want to improve their standard of living or have the option to retire early. Unlike earlier generations that relied on state pensions, today’s investors take charge of their financial futures.
Simply putting money in savings accounts is no longer enough. With low interest rates and inflation often higher than the savings rate, your money can lose value over time. This situation has led more people to manage their finances and become independent investors.
You don’t need to be a full-time investor to succeed. However, it’s essential to understand that investing comes with risks. There are no guarantees; your investments can go down as well as up. Being aware of these risks can help you make better decisions about your financial future.
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!
Start today
Don’t hesitate to ask for more information. Let us know what you need to get going!
Want to learn more before starting your investing journey?
We can help! Academy for Investors’ goal is to empower all private or professional investors to become better investors.
