Investing is a process of putting your money into the financial avenues to make a profit. In recent times there has been a huge surge in voluntary investing due to movements such as FIRE (Financial Independence, Retire Early). In this article we outline some of the key ways you can benefit from investments and how you can get started.

The majority of investors earn money in a few ways: 

  • Trading: Investors can buy assets at a lower price and benefit from selling them at a higher one.
  • Dividends: Some companies will issue dividends to the investors, usually based on the earnings. 
  • Interest payments: Some investors make a profit from the interest payments. For example, if you buy a bond, you can become a lender to a business or government.

To succeed as an investor, you need to understand the risks, read the market, create hypotheses and execute strategies. 

Alternatively, if you want a “set-it-and-forget-it” strategy, you can use a robo-advisor such as Unhedged

Robo-advisors such as Unhedged utilise AI and machine learning to detect patterns in the trading data and place trades without emotional interruption, maintaining an optimal investment portfolio for you.

 

I’m ready to start investing – Join the waiting list now and start your FIRE journey!

Why invest online?

Investing online can be daunting at first, but it comes with multiple benefits:

  • Investing online can help you grow your money faster than putting it away into a savings account.
  • Investing online has a higher chance of returns than you would save by paying off your mortgage or putting money into your offset account
  • By investing, you are more likely to outperform inflation with potential long term returns.
  • By investing now, you save for your future, early retirement, financial independence where you can live a more prosperous life. 
  • The earlier you begin investing, the more you’ll benefit from greater, compounded returns.

All this means sacrificing some of your income and investing a portion of it for a better future.

 

How to get started investing?

Before buying stocks or investing in ETFs, you need to outline an investing strategy.

Before investing, outline and understand your goals. Your goals can be short term, mid-term and long term. Let’s take a look at each:

  • Short term goals: if you need to buy something small and can save for it within a few years, such as a holiday or a car, the general rule is to put your money into a savings account due to the short-term stock market fluctuations. 
  • Medium-term goals: this is strictly up to you. If you’re willing to risk your investment to get higher returns, investing might be the right choice. But if you might need money at short notice, you are better off putting it into a savings account.
  • Long-term goals: consider investing your money for a long-term goal such as retirement because inflation will affect your cash’s value over mid-long periods.

Once you’ve established your goals, reflect on your current debts. Having expensive debts can drain your income, and there is no money left for savings or investment. Therefore it might be a good idea to pay them off first. By paying off your expensive debts, you eliminate the interest expense in your savings and investment profits.

On the other hand, if you have smaller or fixed-term debts such as a mortgage, you might want to leave them as-is and invest your money instead because long term debts are designed to be paid off over a specific term and often come with early repayment penalties. The interest on mortgages are very low now, so paying more off than needed would not save you a lot of cash flow,

Don’t rush into investing right away. Instead, take a break and decide how much you are willing to put aside for five-ten years? 

It is crucial to remember that the amount you invest should not exceed your expenses. And always remember, the bigger the potential reward, the greater the chance of losing your money.

 

Investment Research

Once you’ve established your goals, your budget and paid off your debts, you need to find a suitable investment. Here is our top expert advice to help you find the best investment:

  • Look at the trading volume: you want something that is growing in trading volume. This way, you know it’s a popular choice amongst investors.
  • Check past performance: although past performance is not an indicator of future success, you can use it to assess past volatility. Look at the investments with low drawdowns to make more money by losing less.
  • Understand market conditions: learn more about your investment options, current conditions, events and triggers. This way, you’ll know what to expect from your investment.
  • Assess your risks: the more you know about the investment, and the better you plan your investment budget, the less uncertainty will follow you. Alternatively, you can use an AI-powered robo-advisor such as Unhedged to make calculated decisions for you.

If you are inexperienced or don’t have time to learn or have better things to do with your family: consider using a Robo-advisor.

Robo-advisors such as Unhedged leverage AI and machine learning to find patterns and predict trends in the markets

 

I’m ready to start investing – Join the waiting list now and start your FIRE journey!

Disclaimer: The information in this article is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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