Once you’ve saved enough money through your hard work, you think it’s time to invest; that is, to use it in any vehicle or investment vehicle that allows you to make it grow and increase your personal wealth; but the problem is you do not know where to start.
If this is the case, the following is a guide that will show you step by step how to properly invest your money, and that will help you solve your problem:
1. Get trained on the subject of investments
To properly invest, first thing you must do is train yourself on the issue of investment, which does not mean you have to become a professional investor or obtain some degree on the subject, but simply to familiarize yourself with some financial terms related to investments such as profitability, equity and fixed income, risk management, diversification, etc. (The video presentation below will help you to understand more)
2. Find out about the investment alternatives that exist
If you have not yet decided where you invest your money, learn about the different alternatives, vehicles or investment instruments on the market (business, shares, debt securities, real estate, currencies, mutual funds, deposits term, etc.), and become familiar with its main characteristics (potential profitability, investment horizon, degree of liquidity, etc.), advantages and disadvantages.
3. Choose an alternative investment
Once you know the different investment alternatives exist, choose one in which you start investing, taking into account your investment capacity (how much capital you have available to invest), your profitability goals (how much you want to win over your capital), your risk tolerance, your skills and knowledge, and your tastes or personal preferences.
For example, if you enjoy having control of your investment and want to get the most return for your money regardless of the risk it implies, yours could be business; but if you do not mind others manage your investment and get little return for your money just to be sure not to lose, yours could be mutual funds.
4. Specialize in investment alternative chosen
Once you have chosen an alternative investment which starts investing, Specialize in this, which does not mean that you become an expert, but simply to delve a little deeper into their operation and inform yourself well on all aspects such as the factors that determine their value and how you can make this increase.
For example, if you have chosen the shares as an investment alternative where you start investing, deeper into these might involve learning to determine when to buy and sell a stock, figuring out which websites where you can find information to help you with is this task to investigate what have been the actions that have increased their value or more dividends are paid, etc.
5. Look investment opportunities
Once you’ve specialized in alternative investment, seek investment opportunities for such alternative (the greater has been your homework on the issue of investment and have delved into the investment alternative chosen, the better prepared you will be to identify).
For example, if you invest in business, to find opportunities could analyze the changes and trends in the market, identify new needs, tastes and preferences of consumers, find out what the most profitable businesses are today, to interview with other entrepreneurs or business owners, etc.
6. Analyzes the opportunity
Once you have identified an investment opportunity, collects all the information you can about this (without going to the extreme of wanting to know everything), and then analyze it (not take too long about it or try to anticipate all possibilities), with the to determine whether indeed, it is an opportunity and risk.
For example, if you have identified a building as an opportunity to start investing in real estate, before buying it looks good features and projections of the market, make sure there is a good chance that its value will increase over time or it can be rented immediately, calculated as accurately as possible profitability, make sure your papers are in order, etc.
7. Acquire investment and Manage
Once you have analyzed the opportunity and you’ve convinced that it really is, acquire the investment involved and, if you have control over this, manage it, so that you generate the highest returns or performance possible, either trying that will generate the greatest possible flow of money and / or you to obtain the greatest possible profit when selling.
8. Create a diversified portfolio of investment
The goal of a good investor should not be investing in a single investment vehicle, but to build a portfolio of diversified investment that allows them to increase the odds of getting a good return for your money and minimize the risk, so once which you purchased your first investment, reinvest money earned and / or use it to acquire new investments.
For example, once you’ve invested in a building and started to get good results, it is necessary to seek new properties in which to invest or, in any case, to specialize in other investment vehicle (for example, in business or shares), and then to seek investment opportunities for that vehicle, analyze and acquire investments involved.