The most important thing in investing is to get STARTED

Investing is becoming more and more important to protect savings and to help people achieve their targets for their future. It is clear that many people are scared as they perceive investments as a complex topic. In order to provide a simple and clear guide for them I asked myself how to define an investment solution I would recommend with a clear conscience to my aunt, mother and friends.

I believe the key principles a good investment advice solution should entail can be summed up in a simple word: STARTED! Let´s discover it:

S - SUSTAINABLE. Investing in sustainable firms can make a difference in the world, even bigger than simply adopting sustainable habits. This has become an increasingly important topic both for investment companies and customers. 

T - TIME (LONG TERM) Investing requires time and patience. The more risk you take while investing, the higher your expected return. However, in the short term, more risk means your investment could lose value.  The most important thing to do in that case is to stay put and wait for your investment to move up again. If you imagine your life, you could think of long terms goals you want to achieve and invest for them, for example you will probably need a new car or a new house in few years, when you have children you know you´ll have to provide for their education, and  it is also a good idea to start thinking of retirement even when you are young. If you invest for such long-term targets you will have time to recover short term losses.

A - ALWAYS AVAILABLE. You need it, you get it! You should always be free to get sell your investment if you need the money, at any time and at no cost. 

R - REGULARLY. Saving money on a regular basis is very smart. Even a small monthly amount adds up to a large sum over time. Investing these monthly amounts is even smarter, because you can get a higher return and benefit from the cost-average effect. This means you don´t need to find the right market timing to invest, as your reference price will be an average of market highs and lows.  As an example, you can decide to save even just 1 Euro a month and invest it. Maybe one month the market is high, and you will buy at an expensive price, but you don´t need to worry as you might have the chance to buy at a cheaper price the next months. As a result, in the long run, you will benefit of market value increase and what you have saved every month will turn into a bigger sum to use for your long-term plans.  

T - TAILORED TO YOUR SITUATION. We are not all the same, as we have different investment experience, different incomes, we may have a big or small family, some of us have a mortgage or others are saving money for children education. You can choose your investment according to what is more suitable to you, in terms of knowledge and experience, financial situation, risk aversion and time horizon. 

E - EFFICIENT COSTS. This is a very important topic, as all the costs embedded in an investment product must be clear and transparent, with no hidden costs and with a complete overview of all applied fees... Every euro you save in costs, is another one you can invest! A very efficient and easy to understand solution could be a simple fee which is a percentage of the total invested amount. As an example, if this percentage is 0,99% and for 100 Euro invested on your account for one year, the total cost you will pay is just 0,99 Euro!

D - DIVERSIFIED. “Don’t put all your eggs in one basket”, as a well-known investment saying goes. A well-built portfolio should be diversified in terms of asset classes, geographic areas and sectors. In this way, you benefit for example from the fact that markets go down in one country, they might go up in another country on the other side of the globe. Diversification is usually quite complex and expensive to achieve, but you can find some efficient solutions such as an ETFs portfolio, or a fund embedding an asset allocation, which would mean buying a diversified portfolio within a single instrument.  

As you can see, investments can be perceived as a scary and complex world if you have little experience in it, but if you break it down to the most important principles, you can get it STARTED! Just give it a try and take your finances into your own hand!

I’m curious for your stance towards investing and the STARTED principles – contact me directly or comment below!

Disclaimer: the content of this article simply represents a personal view of the author and it should not be considered as a company view or any corporate communication.