top of page

Read this before you invest your hard-earned money!

Here are 3 easy steps that can help you on your journey into investing.

1) Invest what you can lose. You always have to keep some savings behind for a worst-case scenario. Your car might break down, you might lose your job, or you might have unexpected health expenses. My rule of thumb is to always keep 3 months of savings for unexpected costs. This means that even if you lose your job, you still have 3 months to solve it before you have to start selling your investment assets.

2) Learn about the psychology of investing. This is easier said than done. Our human instinct is to follow the herd. A friend talks about a hot asset. You decide to buy that asset based on the enthusiasm of your friend. Your friend is bias, this means he probably already invested in the asset, before he discussed it with you. You don´t want to be the person at the end of the line, you want to be the person at the beginning of the line. Therefore, you should always do your own research and not just follow the herd by buying whatever other people are telling you to buy. Buy when the market is under-performing, sell when it is over-performing. In other words, buy when the market is fearful (war, financial crises, or epidemics) and sell went the market is greedy. Greedy markets are often characterized by well running economies with no fear on the horizon. Take a suitable strategy that keeps emotions out of the game.

3) Learn deeply about the asset class you invest in. It is important to know what you own. If the market is down or the volatility increases, you need to stick with your plan. Knowing what you own, will help you to stay calm. It might even give you the strength to buy more as the price is decreasing and you are basically receiving a discount on the asset you want to obtain.

bottom of page