The beginnings are always the most difficult, also in investing. There is a stereotype that to be an investor you need to have a lot of money. Meanwhile, most people are able to save using small amount investment. So, is it possible to start your adventure with investments, saving several dozen zlotys a month? We checked it out and compiled some tips for beginner investors.
Rules On Small Amounts Investment
Let us not deceive ourselves. Few people manage to make large money quickly from small savings. Little money is also small amounts of profits. For several reasons, however, it is worth starting to invest now, without waiting for our savings to grow. Firstly, allocating small, but regularly paid amounts to investments every month give a positive effect. After a dozen or so months, our investment funds will start to look serious. Grain to grain and the scoop will collect. Second, the money actually invested becomes less accessible and we are not tempted to spend it on pleasure.
Let’s also remember a few rules that help you achieve much better returns on investment. The greatest enemy of profits is middlemen. Wherever possible, we should avoid them. If we do not know how to choose financial instruments ourselves, let us limit the number of intermediaries offering them to us. Let’s also look at the costs. The purchase of units in mutual funds makes it much easier to invest in a given stock, but if the initial costs and the percentage of investment are large, we may not see the profits. It is also worth paying attention to taxes.
Avoid Borrowing Money
Also, avoid investing borrowed money. This is a very important rule. After your initial successes, it’s tempting to take some extra money to increase your profits. And here’s an important note. We are not just talking about deliberately taking a loan for investment. There is also talk about hidden forms of borrowing money. For example, about putting money into investments that should go to pay off your credit card or other debts. Let us remember that it is very difficult to compensate for interest on debt with investment returns. Often, paying off your interest-bearing debt is the most effective form of investing money.
We should also avoid investments from which it will be difficult for us to withdraw. One of the most important things in investing is an exit plan. If we do not know how and when we can recover the money paid in (at a profit or at a loss), then let’s avoid such an investment. We don’t borrow money at interest if we don’t know when we’ll get it back. We should not buy rare works of art, bottles of wine or collectables if trading them is not easy and smooth.
Let’s also choose two or three ways to invest and add to them every month. But let’s never leave the money invested unattended. Let’s learn from our mistakes and develop our investment knowledge. Let’s try to understand how our money is earning and how we can tweak the score. Over time, small amount investment will turn into larger ones, and our experience will pay off.