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Investment

Investor’s guide: How and where to invest?

Read some basic information on how and where to invest. What should an investor’s guide look like?

He should be able to explain the basic principles of investing and an overview of investment instruments that are available on the market.

The possibilities for where to invest money are theoretically endless. We will focus only on those that are related to capital markets.

Stocks

Shares are a traditional form of business ownership. They can be purchased indirectly on stock exchanges or directly from the owners of the company. Stock exchanges are an easier way to access securities. Direct purchase from the shareholders themselves is not widespread among small investors buying shares for thousands or tens of thousands of crowns and is actually impossible.

Only stock exchange purchases are considered for building a stock portfolio. At least 250 thousand crowns are needed to create a quality foundation. However, this amount is rather indicative, because what an analyst or investment advisor, it has a different view. Let’s say that with half a million you have a better chance of creating an even better foundation than with half that amount.

Recommended advice includes the number of titles in the portfolio. It is said that 30 stocks are a good foundation. Reportedly, it is possible to create a basic stock portfolio of dozens of shares.

If you have the amount of 500 thousand crowns at your disposal, do not invest it all at once. Even in this case, it is better to buy shares from the planned stock portfolio, for example, one year, each month for a predetermined amount. This division avoids the unpleasant moment when you enter the capital market when it is at its peak. Stock prices are higher than in the opposite case – at a time of economic downturn, to which we are allegedly heading again. If you have free money and the desire to invest, now is a good time to buy shares of quality companies at a lower price.

Open-end mutual funds

Open-end mutual funds are the key to building financial assets with smaller entry amounts. In many cases, an initial investment of at least 5,000 is required. This amount represents a commission for a financial advisor. Unlike life insurance, however, you do not lose money if you decide to cancel your investment after a few months. The monthly amount of a regular investment is at least 300 crowns, more often you can meet with a traditional five hundred.

There are also fees associated with fund investing. These are divided into three groups: input, output and line. The average fund is charged with only two types of fees. It is most often a combination of an entry fee with a management fee, or a management fee and an exit fee.

Mutual funds are divided into several aspects. In the market you can find funds that invest in stocks, bonds, money market instruments. Other funds guarantee the amount of the input principal and guarantee a minimum return. Other funds focus on investing according to a geographical, sectoral or institutional key, where you do not invest only in the funds of one investment company, but you choose from the offer of several companies offering investments in mutual funds.

If you are building a portfolio from mutual funds, you can choose two methods. Either you invest a larger amount of money in a similar vein to stocks, or you start building from scratch. In this case, you only need 11 thousand crowns for the first year – five thousand for a one-time investment and then 12 monthly 500 crown investments. Next year you will only need six thousand crowns. If you do not believe in investing in funds, or know nothing about them, but would still like to participate in the financial markets, invest in only one fund for the first year. After a year or two, decide if you want to continue.

Life cycle funds

Life cycle funds represent such better supplementary pension insurance. It does not offer state subsidies, but they will live with you literally and literally all their lives. The investment strategy is based on a long-term investment horizon that speaks for you. Therefore, many life cycle funds offer a dynamic (equity) strategy that is constantly changing to conservative. The minimum one-time investments are as low as three thousand crowns and the lowest invested amounts start at hundreds of crowns. Also read: Life cycle funds according to investment strategy

Investment certificates

Investment certificates are derived from the development of the value of a treasury asset. These assets can be stocks, stock indices, commodities, currencies, mutual funds. By holding investment certificates, you are not entitled to a dividend, as is the case with shares. Compared to mutual funds, investment certificates are cheaper to manage. You can sell them as easily as open-end mutual funds.

This was a list of basic investment options, where and how to invest money. Before you start investing, think about your financial possibilities, how long you intend to invest and what the goal of the investment is. Everything else unfolds from the goal.