How to start investing and not get burnt?

While investing used to be the preserve of those with great wealth, it is now increasingly accessible to ordinary people. However, the problem is that despite the growing availability and the benefits that investing brings, only a small percentage of Slovaks appreciate their finances. Many do not know how to do it, or are afraid of losing their wealth. How to start investing and not make unnecessary mistakes?

Make a plan

Before you decide to invest your money, think carefully about your investment plan and objective. The plan should include:

• Method of investing - means whether you invest on your own, with the help of a professional (financial adviser) or through a bank. If you decide to invest on your own, you can use the services of a broker. These are companies through which you invest.
• How often you want to invest - Investing regularly in small amounts is most ideal for beginners. You won't be short of money in the normal course of business, but it can earn you a handsome sum.
• What will you invest in - every financial instrument has some advantages and disadvantages. You should read more about each option so that you know what risks are involved.

Choose the right financial instrument

For beginners they are the ideal choice low-risk funds or precious metalsthat have a stable value. At times when other instruments are not doing well, their price increases.

When choosing a financial instrument or a financial advisor (intermediary), be aware of any fees associated with this service.

As a beginner investor, you will also come into your own At real estate, which can also be invested in by buying shares in real estate companies on the stock exchange (REIT). Often a more affordable alternative is to invest in a specific project verified by experts, through real estate crowdfunding. You can invest in real estate projects starting from EUR 100.

Another advantage of this option is the fact that most crowdfunding platforms do not charge any management fees.

Expert advice

Don't forget about taxation of investment income. The tax rate is 19 % and 25 % respectively. In some cases, 14 % are then added to this, namely health levies.

Invest only as much as you can afford

Before you start investing and appreciating your wealth, make sure that the finances you have earmarked for this purpose will not be lacking during the month. In addition, you must also have a sufficiently large reserve.

The size of the financial reserve should equal to three months of your expenses. So if you should happen to lose income, you will have plenty of time to solve the problem without having to dip into your investments.

Expect some risk

With every investment comes certain risk. This is also true if you are careful and invest in more stable financial instruments and commodities.

The good news, however, is that the risk can reduce to an acceptable level of risk. One solution is less risky investments, such as real estate. The second solution is portfolio diversification. When investing, don't forget about online security and data protection.

Don't make decisions under pressure and don't panic

Investing is a long-term activity. If by chance your investments fall, don't panic and don't make hasty decisions. Most markets behave cyclically, i.e. after a downturn comes an upturn and vice versa. Think carefully about your next steps and if you don't know what to do, consult an expert.