You don't need to take an economics or finance course to learn how to invest, but it is important to understand these basic investment concepts.
Risk and return
Return and risk always go together. The higher the potential return, the higher the risk. You should never blindly pursue high-return investments. Bear in mind your investment goal, investment period and risk tolerance. Always choose an investment that is suitable for you.
Any investment involves risk. You cannot avoid it, but you can manage your risk exposure with the right strategy to reduce the chances of major losses. The simplest and best way is to diversify your investments and spread your risk. An effective way is to diversify your investment to different asset classes, such as stocks, bonds, deposits etc.
Dollar-cost averaging
This is a long-term strategy. You regularly (e.g. monthly) invest a fixed amount, whatever the share price. In the long run this balances out the cost of buying shares and lessens the effect of short-term market fluctuation.
Compound Interest
Your principal (original money paid in) grows because of the interest earned, so you get a higher return. It’s a snowball effect – the longer you invest, the more you benefit from compound interest. Therefore, it is important to start saving and investing early.
Inflation
For the past few decades, there has usually been inflation in Hong Kong. Your investment needs a return rate that matches or beats inflation. If not, then your money will be worth less.
Find out more from our animation series to help you better understand the basics of investing.
An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth.
The 4% rule entails withdrawing up to 4% of your retirement in the first year, and subsequently withdrawing based on inflation. Some risks of the 4% rule include whims of the market, life expectancy, and changing tax rates. The rule may not hold up today, and other withdrawal strategies may work better for your needs.
Invest in What You Understand: Action: Before diving into any investment, take the time to research and understand the business or industry thoroughly. ...
Value Investing: Action: Look for undervalued assets with strong fundamentals and long-term growth potential.
Hold your investments long-term. Like adding to your investment over time, holding your investment long-term is really important to building your wealth, generating more profit. Your money needs years to grow, and with time, it can grow exponentially and generate higher returns.
A portfolio investment is ownership of a stock, bond, or other financial asset with the expectation that it will earn a return or grow in value over time, or both. It entails passive or hands-off ownership of assets as opposed to direct investment, which would involve an active management role.
The meaning of investment is putting your money into an asset that can grow in value or produce income or both. For example, you can buy equity stock of a listed company in the hopes of receiving regular dividends and capital appreciation in the form of the share price.
When creating an investment portfolio, you must consider return objectives, risk tolerance, time horizon, taxes, liquidity, legal/regulatory requirements, responsible investing, and unique circ*mstances. Spell out these factors and define and share them with the managers of the investment programme.
Address: 58866 Tricia Spurs, North Melvinberg, HI 91346-3774
Phone: +50616620367928
Job: Real-Estate Liaison
Hobby: Graffiti, Astronomy, Handball, Magic, Origami, Fashion, Foreign language learning
Introduction: My name is Lilliana Bartoletti, I am a adventurous, pleasant, shiny, beautiful, handsome, zealous, tasty person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
