Tag Archives: tips

How to earn 10% per year with no risk

Recently an investor asked a great question:“Hey, how can I earn 10% or more interest every year with no risk?”

We would love to say earning 10% each year with absolutely no risk is possible, but the truth is that with any investment you should always be aware of the risks involved. This is applicable for all asset classes, with the level of risk being different for each.

But there’s no need to despair, plenty of people consistently earn 10% or more per year because they are aware of the risks involved and manage this risk appropriately in proportion with their targeted gain. This is actually not exclusive to an individual or retail level investor either. Investment banks have been doing this for centuries, even today, if you walked on to a trading floor on Wall Street or Canary Wharf you would see financial traders leveraging themselves with extremely high-risk high-return strategies.

Here are 3 ways you can easily and instantly start managing your risk today:

1. Diversify

It goes without saying that diversification is the golden rule of investing. That being said, many prolific investors are known for saying that concentration within a single asset class is equally as important. This means that you do not necessarily need to have a share of your portfolio in every single asset class that exists, but you could pick a few and become experts in those areas. Even within an asset class itself, there is plenty of room for diversification. For example, different stocks and bonds if you invest in securities or loans with different credit ratings, durations and country of origination in P2P.

Here are the top 7 asset classes worldwide:

  • Cash Equivalents
  • Equities
  • Bonds
  • Real Estate
  • Gold
  • Precious Metals & Commodities
  • Alternative Investments

Did you notice anything about this? P2P isn’t even listed here, mostly because the idea of the individual investor having access to the wider consumer credit market has only been possible for the past 10 years. However, with the rate of year-to-year growth in the past decade it’s more than likely this will gain a top spot in the future.

Anyway, the point we’re trying to make here is that it’s highly likely that either you or someone you know has earned an excellent net return consecutively without having exposure in all 7 of the major asset classes.

As Benjamin Franklin once said:

“An investment in knowledge always pays the best interest.”

So, like Benjamin, get to know a few asset classes extremely well, diversify within those asset classes, monitor your progress and adjust your strategy appropriately.

2. Check your maximum exposure

This is connected to the previous topic. First things first, take a look at your net worth (no, you don’t have to have tens of thousands for this to apply to you) and how much you plan to invest initially as well as on a monthly basis. Then, ask yourself, how much risk are you willing to take and how much do you need the money you plan to invest? If the amount you choose falls nicely within your monthly budget, and you know you don’t need this money each month for your committed expenditure and bills, then you’re already on the right track. If you’re looking for short-term gains (such as day-trading) to pay your bills at the end of the month, you might want to take a step back and review your monthly budget.

Once you’re confident in the amount you will invest, decide on how much exposure you want to have in different asset classes, companies if you’re buying stocks, platforms and credit ratings if you’re investing in P2P, geographical areas if it’s real estate and so on. This will allow you to manage your risk by allocating a specific percentage of your total investment portfolio in different places, so if there’s a macro-economic event then you can be confident that you have taken the steps to minimize the impact this will have on your investments.

The famous U.S. investor and entrepreneur Robert Arnott once said:

“In investing, what is comfortable is rarely profitable”

This is not to say that investing cannot be made simple, instead it emphasizes that you should step outside of your comfort zone to make the most of your returns. Seeing your strategy through to the end and not jumping ship at the first sign of volatility is critical.

3. Cash and Cash Equivalents

Suffice to say, anyone who holds their money in their local bank will not earn 10% per year interest. In fact, you may be lucky to earn 0.01% depending on where you live. While it is important to have access to some cash with a very short maturity and near-instant liquidity, review how much is actually necessary so you avoid eating in to the absolute return (and the knock-on effect on compounding) in the long run. How do you review it? First, take a look at your emergency fund and make an assessment of how realistic the amount is; If you’re holding on to 2 years equivalent of your salary, you should think about whether you will ever need this much money for a rainy day.

Another tip

You should also consider the impact of tax and inflation on your overall net return, as this varies significantly between asset classes, your country of residence, current financial standing and more. If in doubt, always consult a certified tax or financial advisor.

There you have it, manage your risk religiously and you will have a realistic opportunity to consistently earn 10% interest or more per annum.

Source: www.bondora.com

5 helpful tips on how to get rid of debt

There are no more stressful things than debts, worries about monthly spending and insistence of creditors. Did you think maybe you just do not know how to get rid of these debts? Well, you’re not the only one! Fortunately, there are experts who can show you some practical ways that can help you pay your debts in time.

First, there are periods when debt is inevitable. For example, you can buy a house, a car, pay for medical fees or school for your child. If you do not have the money to make a full purchase, then taking a loan can often be a move even indicated.

However, there are situations where you borrow more money than you can afford and you are unable to repay them. This is the time when problems arise. However, it is important not to panic. You can always find solutions to help you get rid of debt.

Here are some practical tips that will help you better manage your debt:

1. Perform a financial reassessment

It begins by always looking at both the mistakes and the financial successes of the previous year. What can you learn from this? What did you do well? What could you do better? Draw up a budget for the next year, using what you learned from the previous year and use it to guide your spending in the future.

2. Plan and buy smartly

Make a list of the items you need to buy before shopping. Knowing just in advance what you need and limiting only to purchasing these items will allow you to fit into the budget. Try to establish with your family and friends and buy together what you need in larger quantities. This can help save you in the long run.

If, for example, you tend to exaggerate with Christmas gifts, and this is important for you, prepare yourself early. Consider budgeting and buying gifts throughout the year to avoid last-minute spending and debt.

3. Take a part-time job

One of the best ways to get rid of debt is choosing a part-time job. The extra money you will earn is an excellent way to pay your bills. Normally, if the time permits you and your current job is not very demanding.

4. Sell what is no longer useful

Another recommended way to get some extra money to pay your debts is by selling items that you no longer need or you no longer use.

5. Consider the advice of a specialist

If you realize that you simply can not manage your own budget and personal expenses, then you can call on a financial specialist. It does not have to be a professional you need to pay. Instead, he can be a friend with money management experience that can provide you with financial education, guidance and counseling.

10 tips for start-up investors on the capital market

If we want to invest in the capital market, it is very important to have patience and not to act on emotional impulses.
We need to control our emotions and not let ourselves be influenced by the subjective aspects when trading on the stock market.
Greed and fear are the biggest enemies of investors. If you’ve decided to sell a title at a 25% profit, respect that threshold because otherwise it’s possible to lower your profit as a result of further corrections. And the mutual is true, if you have set a loss of 15%, do it, otherwise it is possible to record a larger loss.

10 tips for start-up investors on the capital market:

1. Do not invest in the stock market the money you need right away. Do not plan what to do with the money you will earn from your stock investments, because the stock market is unpredictable, and no matter how much experience you have or how many growth signals you may notice, the market may contradict you and fall.
It is not advisable to invest in the money programmed for important events such as schooling, medical interventions or other projects, because you may have less pleasant surprises.
It is recommended to invest in the amount of money that you may be deprived of for a period of time. It is said to “forget” about the money invested in the stock exchange. That does not mean you do not watch the market because it will do all the work for you, but not include that money in the next financial plans.
Also, do not invest in reserve money set aside for unpredictable situations, because it may not be to your advantage to sell whenever an emergency occurs!

2. Do not invest the borrowed money on the stock exchange. Borrowed money is interest-bearing and must be repaid within a certain amount of time. If the stock market does not confirm your theories, you will have to take money from other sources to cover any losses and to repay the borrowed amounts.That way, you may unbalance your budget over a long period of time and it will be quite difficult to recover financially. Reimbursement of borrowed money, which you have not benefited from due to decreases, creates a lot of stress and you will remain with a negative image about the capital market.

3. Investments on the stock exchange start with small amounts. It is much more comfortable to start trading small amounts in psychological terms because potential losses can still be small. All trading principles and rules are the same regardless of the amount you invest, whether you are a start-up investor or have a low-value portfolio. It is much easier to gain experience with an account with less zeros because you are more relaxed and you can learn from your own mistakes.

4. Start with a demo account in which to create a virtual portfolio. This will help you better understand market mechanisms and build your own information and analysis system. When you start to gain knowledge and figure out how the stock market works and are happy with the returns you get from the virtual portfolio you can start trading on a real account. You can still keep your demo account to test new strategies and make changes to your portfolio, which you are not sure you want to do in the real market. You will gain confidence in yourself and the capital market will no longer seem an unacceptable field. It costs you nothing to make a demo account, but you can gain a lot of experience.

5. Do not invest in complex financial instruments at first. Another important tip is to approach the market from simple to complex. From the basic investments that you know and know how it works and how you can gain, diversify your portfolio with more and more complex financial instruments as you gain experience.

6. Do not wait for the best price. When you have decided to sell or buy, do it at the market price. The capital market is dynamic and constantly moving, and no matter what plans you have, the market will try to contradict you. If you are a long-term investor, small price differences should not be the reason why you can delay a transaction. The more you expect the titles you are targeting to reach a certain price, the more you risk losing your earnings, or even worse, you can record higher losses.

7. Set up an investment strategy and respect it. Once you have identified the type of investor you are and your attitude towards risk, you can begin to make a strategy for future investments. The most important thing about the strategy you set is to respect it and not to change it frequently. If you oscillate between two or more strategies, you risk not to get the expected results. Discipline is one of the most important qualities of an investor, be it beginner or advanced.

8. Do not invest all the amount available in a single financial instrument. The likelihood that all the financial instruments you invest in will decrease at the same time is rather small. By allocating financial resources to different destinations, you can cover the potential loss of some of your investment through the gains made by others. No matter how tempting an investment is, do not bet on a single card!
Diversification can make a difference between a winning investor and one who still expects his investment to become profitable.

9. Invest in the long run, so downtimes will have time to recover and on long-term you can make profit.

10. Invest in blue-chips. Blue-chip shares are the most liquid stocks with high capitalization and consistent financial results over the years. These shares have increased their value over time, due to the confidence shown by investors, confirming each year without disappointing their shareholders. These shares are usualy part of a number of stock indices, which once again demonstrate their quality of capital market stars.

Last but not least, when investing in the capital market, you must always be informed and not invest based on rumors. Any information needs to be verified from multiple sources and as far as possible these sources must be reliable.

Do not forget that in order to be an investor you need to spend time on this activity and become actively involved in decision-making.


Enjoy this blog? Please spread the word :)