If you are thinking about investing, then there are probably so many questions bothering you. These questions could range from the type of investments, how much to invest, where to invest, what are the risks etc.
While it is a fact that investing is a path to financial security and freedom, not many people are sure how to go about it.
This ignorance breeds fear and makes many lose out on genuine investment opportunities.
With this educational topic, we’ll try to provide clear answers to the seven most common questions which bother most people about investing.
Our answers will be made so simple that even the layman on the streets will have a clear understanding of what investing is all about.
1. Where Should I Invest if I’m New to Investing?
The question of where to invest inundates new investors or those with intent to invest. Although there is no straightforward answer to this question, experts advise you to decide what you want to achieve. This means you set an investment goal.
Your investment goal could be long-term or short-term.
Long term investment goals involve retirement plans, saving for children’s university education etc.
If you fall in this category, you should invest in equities as they do deliver greater returns in the long run.
Investing in the stock market for long-term investors is also good as it gives your investments time to recover in the event of a stock market bearish cycle.For those with a short-term investment plan such as to buy a car, house wedding etc, experts advise you to flee from the stock market as a crash will not afford your investments time to recover and meet your goal.Those with a short-term investment goal are advised to put their money in less risky investments such as fixed deposits, savings account, treasury bills, government bonds etc. 2. Is Trading the same as Investing? No, trading and investing are two different things.Karan from Safe Forex Brokers explains that “Trading involves speculating on the future price trajectory of different financial instruments. It is buying and selling securities with the intent to make a profit from their price movements. ““A typical example of trading or speculation is forex trading where traders try to predict the rise and fall in prices of currencies of different countries while trading with margin," he says."Trading is highly risky, especially when it involves margins. It is advised that only highly skilled, experienced and professional […]
