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Investment

A few rules for the right investor

The right investor respects and follows several rules. Once adopted, investing is a bit safer.

The principle first is to invest with a cool head. Don’t be fooled by nice charts that capture historical performance. Keep in mind that once the tabloid press – in our case Blesk or Aha, or both prints at the same time – starts with investment tips, it is high time to stop investing.

Watch out for fashion trends

Once you see articles or reports in the media about how capital markets are doing, carefully consider all your investments. If you are a long-term investor, consider taking an investment break. Why buy assets that are at their all-time highs and tend to grow even more? The more you buy in times of economic boom, the more you will experience when the trend reverses.

There are several rules on how to best invest. We have briefly summarized them into short points, including labels.

Invest regularly

A regular monthly investment will help you make money on stock market declines. So you buy cheaper. In addition, you will improve your investment discipline, which is important for you as a long-term investor.

Diversify

Don’t buy one type of investment. Keep in mind that you should have your financial assets divided into several smaller parts. Put the money into various products according to the investment horizon, risk, profitability and liquidity. Don’t forget about institutional diversification either. Entrust your money to more financial groups.

Beware of currency risks

Be aware of the currency risks that come with investing in other currencies. Remember that you risk it more than twice. One is the risk arising from the investment itself, and the second is the exchange rate difference, which can “bury” a relatively interesting return.

Do not time the market

Market timing means that you are trying to buy when the capital markets are down and sell when they are up. Market timing is not recommended even for seasoned investors. It is difficult to hit the bottom and the top.

Have more resources

Do you need advice? You should first use the knowledge and experience of those who offer you investments. But don’t trust them at all costs. If in doubt (but even without them), you better check everything. Use at least two sources of information.

Benchmark

Use a benchmark of two or more similar investments to compare performance. If you are a fund investor, see how different investment companies are doing that invest within one region or industry. Historical performance is irrelevant.