10 Tips for Investing

In any investment, you expect to have fun and make money.
Michael Jordan

Many people or companies, once certain levels of income have been achieved, dedicate part of their income not only to consumption, but also to savings and investment. Consumption is simply spending your money on goods and services. Saving is to keep it for future use. But… What is Investment?

What is investment?

Never depend on single income. Make investment to create a second source.
Warren Buffet

From an economic point of view, investment is the purchase of goods that will not be consumed today, but will be used in the future to create value. From a financial point of view, it is a monetary asset that is bought with the idea that it will obtain some return in the future or that it can be sold for a higher price.

Investing can be a pleasant activity or it can be a big hassle. It has been told a lot about investing and not everything is true. Occasionally, recommendations appear to make investments in some instrument, market or company, which at the end of the day does not turn out to be good.

Sometimes, the tips we hear are not very well intentioned and seek to take the market to some point looking for their own convenience. Jordan Belfort’s case was even taken to the movies.

10 Tips

Money management has been a profession involving a lot of fakery – people saying they can beat the market and they really can’t.
Robert J. Shiller

At Steering Bird, we are convinced that financial education is essential for everyone. Based on this, we give you ten tips for investing. Some of them we already mentioned in our article on the Ponzi Scheme.

1. Don’t trust financial instruments that deliver too high returns compared to what the market is giving. Remember that scammers, like Carlo Ponzi, offer high returns in very short periods of time.

2. The assets you invest in must be clear, indicate how and where you invest your money, and state how you can get out. Remember that scammers offer a secret magic formula that they will not reveal to you.

3. Don’t invest in something you don’t understand. It is important that you understand about the investment asset where you are putting your money. Sometimes your bank or investment agent suggests instruments not to help you, but to meet their own sales goals or because some financial asset is in fashion.

4. Study or get advice very well, especially if you want to invest in sophisticated instruments.

5. Evaluate your investor profile, according to your financial capabilities and your level of risk aversion. Be aware of the scale of your investment.

6. Don’t rely on past returns to forecast for future earnings. Past gains may correspond to the effect of luck.

7. As a general rule, don’t go into debt to speculate. Just as it is a terrible idea to cover debt with more debt, so is speculating with debt.

8. Diversify your investment portfolio, this will help you reduce and better manage risk.

9. You must consider that any financial instrument you buy must be done in an entity supervised or regulated by some public body.

10. It is essential that you review and read the contracts before signing them, to know what you are buying.

To finish, we indicate a phrase that is commented in the world of trading: when you do not know who is losing money with something, the loser is you.

And… would you add another tip for investing?

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