What should you consider before you start investing?
A growing number of people are showing interest in investing. This has been evidenced by an increase in the number of trading and investment accounts opened over the last 18 months and the interest is expected to continue for the foreseeable future. Additionally, more and more business and startup entrepreneurs are getting involved as well. This is due to an interest in becoming more financially literate as well as the desire to benefit from investment yield. But how to go about it?
What are your options?
There are several different options when it comes to investing. You could decide to speculate on the value of stocks, either through buying, selling, and trading stocks, or trading CFDs. This means you just ‘bet’ on the change in value over a certain amount of time, rather than purchasing the underlying asset. Alternatively, more people are getting interested in cryptocurrency trading. This is where they buy a cryptocurrency and then hold it and sell it at a profit in the future, or trade it for other cryptocurrencies in hopes of making a profit.
There are also options in the commodities market such as gold, oil, and grain, or through creating a portfolio that has a little bit of everything.
One of the easiest and most popular forms of investment however is the foreign exchange market. Unlike other assets, everyone is familiar with currency as we each use it every single day.
What is forex trading?
Foreign exchange trading is known as forex for short. The market is the largest and most liquid in the world, with a daily trading value of $6.6tn. Millions of investors, be they professionals or amateurs, purchase different world currencies and then trade them with other currencies, hoping to benefit from fluctuations in value. The base currency- the one that all others are measured against is the US dollar. In terms of popularity, the Euro and the Sterling are also popular and traded widely.
But before jumping into the forex market, it’s important to understand how it works. It’s not as simple as just buying some currency and hoping for the best. You need to understand what can impact values, as well as trends and forecasts. To get to grips with what is forex trading and how does it work, it’s shrewd to do research first. Look for sites that provide a wealth of accurate and up-to-date information on forex trading as well as the ways you can do it. You should also be sure to conduct thorough due diligence on the platform you choose to trade with, to make sure they are the best fit for you.
What to do with your trading profits
Of course, there are no guarantees that you will make a profit from your investing and trading escapades, but if you do, you should have a plan in place. The reason for this is what you intend to do with the money can impact your investment strategy. Many people like to use their profits as a ‘rainy day fund’, this gives flexibility in terms of investments and allows them to experiment with various long and short-term strategies.
Some may be interested in using the funds to start a business. In these cases, typically they will look for a short to mid-term investment strategy. Those looking to invest in an existing business can have a mixture of short, mid-term, and long-term plans to hopefully cover all their needs.
Investing is no longer just something for men in suits, it's something that's becoming a mainstream activity and interest. Businessmen, entrepreneurs, startups, and even those with little other interest in finance are becoming keener to try their hand on the world's financial and asset markets. Don't get left behind!
