Tag Archives: shares

How to invest: 5 basic tips for beginner investors in stocks

Investments for beginners

The development of technology has increasingly paved the way for ordinary people to global financial markets. But easy access for individual investors to international markets comes with the need to be educated about them and to understand the risks they take.

1. Do your homework

Once you have decided on which platform you want to invest, you have to do your homework. Investing means more than choosing a few random shares, with the hope that everything will go well on its own. A familiar example would be that when you buy a house you do not choose one at random from advertisements, but you will go to visit it. And to determine if it has a fair price, you look at the neighborhood, the real estate market in general and then you make a decision.

Similarly, before you start investing in stocks or any other asset class, you need to research the market to understand what you are investing in. Read about each asset and invest only when you feel comfortable that you can make a well-informed decision.

Thanks to the internet, nowadays it is easy to access information about listed companies. You can see what their income and history are, you can read their news and recommendations for investors. Sector or market information or even political news is also important – for example, we can now see how airlines, even the best performing ones, are affected by Covid-19 travel restrictions or how incentive packages economically affects markets. Being up to date with things that happen in the media helps you better understand the evolutions of stocks and trends in the markets.

2. Define your financial goals

Before you invest your money, you need to have a clear idea of what you want to achieve and how you will do it. You need to understand your personal goals as an investor. Do you plan to invest in the long term (10 years for example) or in the short term? What types of investments will help you achieve your goals? What are you ready to risk?

Investors should be encouraged to define an investment strategy that suits their needs, including their risk attitude. To mitigate risk, they should diversify their portfolio, adopt a long-term attitude and invest only in financial instruments with which they are familiar and for which they understand the risks they take.

3. Invest the money you don’t need in the next five years

Risk appetite should always be linked to investment objectives. Evaluate your current financial situation to understand if you can take the risk and always invest with money you will not need in the next five years. Never invest more than you can afford to lose!
You need to have a long enough time horizon for the investments you make to avoid market fluctuations. If you have an amount at your disposal, but you know that you will need this capital in the next 12 months, then the recommendation is to invest in a less volatile asset class, such as bonds.

Over time, stock markets have provided excellent returns to long-term investors. For example, since the establishment of the S&P 500 index (stock index composed of the top 500 American companies) in 1926, it has increased by an average of 10% annually. This is a much higher return than those generated by other assets, such as government bonds. You can also start investing in shares with a relatively small amount of money using a commission-free platform, as commissions can affect your profit margins.

One of the factors that discourages people from investing online is cost. The idea is still widespread that you need a lot of money to start investing. Moreover, equity investments are often perceived as an extremely complex process, involving technical knowledge and attracting expensive commissions. This is no longer the case. A number of online investment platforms, conduct transactions with shares without commissions, as well as fractional shares – you can actually buy a part of a share, a percentage of it, expressed in dollars. This offers the opportunity to invest $ 50 in high-value stocks, such as those of Amazon (which trades at about $ 3,000 per share), Tesla (over $ 700) or Alphabet (Google) – whose shares would cost about $ 2,000 a piece.

4. Practice before you start investing

Start with small amounts of money or practice with a virtual demo account, while learning the markets and defining your strategy.
Demo accounts of several online platforms allow you to practice without risk. Every user who registers receives access to a demo account, credited with virtual money, so that they can practice their strategies, learning to work with the platform before investing with real money.

5. Diversify your portfolio

Diversification is a risk management strategy and the proverb “don’t put all your eggs in one basket” explains the concept very well. In other words, invest in different assets or market shares to limit your exposure to a certain class of assets or financial instruments.
The purpose of diversification is not to achieve very high returns, but to manage risks. Think about what it would have been like if you had invested all your savings in the shares of an airline company just before the pandemic, which made travel difficult. You don’t want to be completely dependent on the performance of a single company or a single sector, maybe even the economy of a single country or continent.

BitOfProperty peer-to-peer crowdinvesting platform overview

BitOfProperty is a blockchain based real estate crowdinvestment platform,making property investing affordable and increasing liquidity of the investments. The company is headquartered in Singapore and has a subsidiary inEstonia.

BitOfProperty is on a mission to bring real estate investing closer to people. Due to typically high minimuminvestments, many people are unable to personally invest in real estate as an asset class. Additionally,real-estate can often take more personal involvement through the cycle of renting out a property.BitOfPropety’s goal is to provide everyone the ability to invest in real estate.

If you invest for the first time at BitOfProperty don’t forget that you can get € 10 signup bonus to make your first investment, more details HERE.

All assets available on BitOfProperty are carefully screened and evaluated internally prior to listing on the platform. During the evaluation, the team of BitOfProperty will assess properties from a technical, financial and also legal point of view. When the criterias are met and support the property to be listed, the investment term period is set and the property is made available on the platform.

Investing

In order to make investments on BitOfProperty platform you need to verify your profile and add funds to your account. If your verification has been approved by the platform, you can go and explore properties listed and start making investments.

All properties are available for browsing on the Properties page. Clicking on a specific property will take you to an individual property page where you can find more detailed information, such as pictures and description, monthly distributions, capital allocation and all other supporting documents for the investment opportunity. BitOfProperty wants to ensure that you have all the necessary information to make an informed decision.

If you decide to invest in a property, make sure you have verified your profile. After successful verification, follow these steps:

1) Top up your Wallet using a wire transfer with at least the amount you would like to invest. Instructions for adding funds can be found in the Wallet page.

2) Invest either in an ongoing crowdfunding campaign or buy available shares the investors are selling from other properties.

There is no minimum investment amount set, as this may vary depending on the lowest share prices available on the market. Also, there is no cap on the maximum investment amount this is dependent on the maximum amount of shares available on the platform.

Before making an investment, you need to transfer money to your account on the platform. Once the money is on your platform account, you can choose a property to invest in. For the crowdfunding deals, the amount invested will be reserved at first and when the total investment amount is reached, the amount will be transferred to SPVs bank account by BitOfProperty and the property acquisition will be carried out. For the over-the-counter marketplace deals, where you buy shares from other investors, you would have to fill out a Buy Order. Before that, make sure you have sufficient funds in your Wallet. Once a matching sell order has been found, BitOfProperty will contact you directly to complete the transaction.

If the investment amount of the campaign is not reached, the money is sent back to your wallet and you can use it to invest in other investment opportunities or transfer it back to your personal bank account.

When you make an investment, your share will be calculated by dividing the amount you invested with total investment amount of the deal. Both monthly rental income and capital gain will be distributed according to the share you own in the property. Rental income will be distributed every month, whereas, capital gain will be distributed in the end of the investment term. If you sell your share within the investment period, you will receive capital appreciation on your share earlier, assuming that you were able to sell the share with a profit.

Investment term for the opportunities is usually between 3-5 years. The investment term can be shorter or longer, depending on the situation of the real estate market.

Fees

There are no transaction fees for the investors.

Investors are only charged with the Management Fee of 10% from the rental income. In case there is a vacancy period with no rental income, the Management Fee will not be charged.

 

 

5 criteria to identify the best investment for you

We are all interested in identifying a good investment, that’s for sure.
But some of us are not content with just that.
There are enough people who are looking for the absolute superlative and want to find out what is the “best” investment.
So, as far as investments are concerned, the notion of “best investment” – in general terms – simply does not exist!
Because in this area everything is relative and depends very much on the preferences and peculiarities of each of us.

In other words, it’s like going to a restaurant and asking the waiter to recommend you their best meal …
Obviously, he does not know your tastes and preferences, so he would not know if you like meals based on meat (and what kind meat) or vegetarian, if you want something more consistent or a salad would be enough. In the end, the decision is largely subjective because it depends only on your particularities.
Exactly the same is true of investment.

No one can tell you from the start what is “the best investment” for the simple reason that it depends exclusively on YOU.
However, there are some criteria that you can determine if a particular investment is or is not right for you.

Here are 5 criteria according to which you can determine which is the best investment for YOU:

1. The degree of risk of the investment

The first thing we think about a certain investment is its degree of risk.
Therefore, in order to know what kind of investment we are going to (and of what kind of investment to keep away) it is very useful to know our own risk profile.
For example, if we reject the idea of risk from the start, it is best to focus on the guaranteed investments, such as bank deposits and government securities. But if we are willing to accept a certain risk, but a small one, we have low-risk investment funds.
On the other hand, if we can accept capital markets fluctuations in hopes of achieving greater long-term profits, we can opt for investment in stock exchanges or different kinds of commodities.

2. The investment profit level

We must always keep in mind the reasonable profit level that a certain type of investment can realistically bring, in order to match the degree of risk of that investment.
Only in this way can we determine the risk / reward ratio for a particular investment and thus compare different types of investments.

3. Duration of the investment

It is very important to establish from the beginning what is the minimum time interval that we are willing to stay with that amount in a certain investment.
In this way we can match the duration of an investment with its degree of risk, so we will not to get into the situation where we have to withdraw that money at a time that is less favorable.
For example, for a short or medium term, usually the most useful financial instruments are those that are guaranteed or low risk. Because the particularities of capital markets or real estate are acceptable only if we are considering a long or very long term.

4. The amount invested

However attractive it may be at one time to invest in building a block of flats or a mall, this would probably exceed our financial availability.
So finding an investment that fits both in size and flexibility with our budget is more important than just considering the profit it can bring us.

5. Location of the investment

There may be enough types of investments that seem interesting to us, at least at first glance, but some may not be accessible to everyone.
For example, if we were interested – let’s say – investing in government securities issued by India (with an annual yield of nearly 7%), we will find it hard to find a broker that have them available in its offer.
So the physical location for a particular investment as well as its availability are important elements to consider when trying to find the best investment for us.

error

Enjoy this blog? Please spread the word :)