Start Investing in 2016: The Basics

Here at PINK, we’re dedicated to helping you reach your potential. That means achieving financial independence, and making good money choices for the future. A big part of that approach is securing a strong, stable career. Perhaps it’s starting a business or a side-hustle. But, a key part of this financial future is investments. Don’t freak out! It might sound like a daunting option. After all, we’ve all heard the horror stories about brokers losing their money!

Don’t worry, we’re going to show you the sensible and risk-free methods of investing. We’re not talking about the terrifying world of day-trading and speculations. We’re talking about long-term, profitable growth in strong investments. If you still have your doubts, read through the article, and let us introduce you to the progress. At the end, you can make an informed decision about whether this is the right path for you.

Long term investing. We’ll start with our number one golden rule. What we’ll guide you through today is long-term investments. Think of investing as an alternative to your savings account. If you’ve got your money in a savings account, it’s making a maximum of 1% interest at the moment. With long-term investing, you can expect up to 7% or higher. Remember, the stock market – in general – moves upwards over time. This is called a ‘bullish’ pattern, and it’s the dominant movement in markets. Invest in the long term, and your money will move upwards with the flow.

Stocks. The most obvious place to start is buying stocks. This is what powers the main global stock markets and price movements. In its simplest form, buying stocks means buying a portion of the company. When you buy Apple stocks, you now own a portion of Apple. When Apple does well and makes a profit (which it has done year-on-year for a decade), you make money. Let’s say Apple’s profit and value increases 10% in 2016. That means your stocks are now worth 10% more.

Forex. Another form of investing is the Forex market. This stands for ‘foreign exchange’, and it refers to currency. You’ll have come across this when you go on holiday. You might have changed your dollars to euros. There’s an exchange rate involved, and it fluctuates on a daily basis. Forex investors take advantage of these fluctuations to make money. You can do a similar thing, and invest in currency that is particularly strong. For example, the dollar is considered particularly strong at the moment. This trend should continue over 2016, so buying lots of dollars on the Forex market should see your money increase.

Gold and silver. One of the safest investment options is gold and silver. These materials are used to provide stability to an investor’s portfolio. Gold and silver are notorious for riding out global economic crises. They were the only investments that remained stable after the 9/11 attacks, for example. When the Chinese market crashed at the start of this year, Gold and silver soared, because it provides stability. Investors love gold and silver because it returns strong, consistent profits.

Mutual funds. If you love the idea of growing your wealth, but haven’t got the patience to learn the market, try mutual funds. With mutual funds, you’ll hand over a portion of your money to an experienced financial expert. They’ll mix your money with deposits from hundreds of others, so they can invest in a wide array of stocks. You’ll then get a percentage of the returns at regular intervals. It takes the stress of investing away, and puts it in the hands of an expert.

The golden rules of investing. Now that we’ve outlined the various investment options, let’s look at few simple rules. These will keep you safe and secure. Remember, we’re looking at risk-free, stable investments.

Rule #1: Thing long term
We’ve already mentioned this at the beginning of the article, but it bears repeating. Despite the headlines and bold claims, investing is not a get-rich-quick scheme! Instead, it’s a get-rich-slowly scheme. Try to ignore all the noise about short-term movements, volatility, and financial news. Focus your strategy on the future. Think about which companies are going to dominate in 10 year’s time. What investments are strong, stable, and moving upwards on a year-to-year basis?

Rule #2: Diversify
If you are thinking about investing, never put all your eggs in one basket. Let’s say you’ve put all your money in technology stocks (ie. Facebook, Apple, Google etc). What happens when the tech sector crashes? You lose all your investment money. But, if you’ve also got some investment in gold, banking companies, and retail, you’ll balance the loss. It can feel overwhelming to build up a portfolio like this, but it is essential. There are plenty of stockbroking platforms and software that will help you keep track of things. Click here to learn more about trading accounts, and how to manage a portfolio from home.

Rule #3: Research
We can’t stress enough how important it is to invest in what you know. If you don’t understand it, don’t invest in it! Let’s take Apple as an example again. You need to thoroughly research the technology market. Where are the overall consumer trends heading? What is Apple’s ten year plan? What is their next product, and when is it released? Who is on their executive board, and do they have a track record of success? What are their profits and losses over the last year, and what are their annual projections? Only with all this information can you make an informed decision.

Rule #4: Follow patterns
Most people will tell you that the stock market is completely unpredictable and volatile. The truth is actually quite different. If you zoom into the weekly or even monthly stock market graphs, it does look volatile and unpredictable. However, pull back to a year-on-year graph. You’ll easily spot the dominant movement. Try to forget about the daily, weekly, and monthly volatility. What is the long-term pattern doing? If it’s going up, buy it. If it’s going down, sell it.

Investing isn’t as scary as it sounds. All it takes is some research, and a long-term strategy. Good luck!