Time Horizon and Risk Tolerance
Investments can be short and long-term. Every investor chooses the most relevant strategy and time for investing money. Let’s go over the main differences of investments by time:
- Short-term – focused on the quick building of capital. The period of such investment is longer than 12 months. That said, the depositor can make good money.
- Long-term – the expected time horizon of these capital investments is over 12 months.
In general, the time for investing to make money is not limited: it may be six months or 50 years. However, financial advisors recommend investing for a period of longer than 12 months.
To make money and avoid losses in investments, certain experience and knowledge are required. It is important to understand that even the most reliable investment may be accompanied by risks. The next categories of risks may be distinguished:
- Currency. Exists for any money transactions.
- Nation. Typical of a separate nation and relates to economic, political, legal and other changes.
- Market. Attributed to the fluctuation in stocks or bonds value.
- Separate company. Relates to changes occurring in a certain organization.
To minimize loss, financial advisors recommend against buying the stocks of just one company. To make money and get a guaranteed income, you need to choose several priority areas. Beginner investors are recommended to start with investment funds, which make it possible to get a balanced portfolio. These can be mutual investment funds and exchange traded funds. There may be all kinds of investment vehicles within one fund. A fund may consist of stocks, bonds, or other assets. There are many options.
What to invest money in
Money may be invested in any assets. Most importantly, you need to understand the chosen area and it should be clear to you. Let’s talk about sought-after and popular investment vehicles and income generation.
These are securities providing the owner with a share in the company capital and granting the right to earning by way of dividends. Today, stocks are the most popular kind of investment. This kind of investment features a list of advantages:
- Earning is higher than deposits and bonds may offer.
- Participation in company management.
- Opportunity to buy even one stock at an affordable price.
Important! Under the legislation in place when investing in stocks the investor shall pay a tax on individual income of the amount of the earning, which is 13%.
Bonds are debt instruments. In layman’s terms, when buying securities, you lend money to the state or a separate company. The organization pays you a fixed interest (coupon yield) for using your funds. You can earn on bonds from 5% per year and higher. Income payment is carried out once every month, quarter, half year, etc. It depends on the company type and contract terms. To get a fixed income in long term you need to have bonds of different companies. Moreover, you’ll have to buy up papers once a year.
Investment in real estate is not the best way to make money. The exception is commercial property. Investment in commercial facilities yields to 12 % per annum. In the case of regular apartments, the next nuances should be considered:
- To buy a residential space, you’ll need a significant amount of cash.
- A living accommodation has a long payback period.
- Additional risks should be taken into account, for example, the need for renovation, utility bills, etc.
Investing in apartments and houses makes sense only when you inherited the living space or it stands idly for a long time. Buying square meters specifically for this purpose is not recommended.
Digital assets growing in popularity lately. Cryptocurrency has no tangible or electronic form. This is a conventional accounting unit written to a certain wallet. It is possible to make money on cryptocurrency, however, this way of investing is associated with some risks:
- High fraud risks.
- Money loss occurrence as a result of technical malfunctions.
- Limitation on the part of the State.
The risk of losing money on cryptocurrency is much higher than the possibility to earn them, especially when you have no experience and required knowledge.
An international market where banks make the transactions of sale/purchase of currency pairs of interest. The transactions volume on Forex is million dollars. Only large organizations and special licensed companies (brokers) are admitted to the platform. Traders can take part in transactions only through intermediaries. This is one of the most popular and sought-after ways to make money today.
Why Forex is a good investment for almost everyone
The key advantage of Forex is the opportunity for a quick increase in income. Experienced traders get to 100% of their income per month. Besides, there are the next advantages of the platform:
- Entry with minimal investments. You do not need a big startup capital to start making money.
- Free working schedule. The person doesn’t have a boss.
- No geographic anchoring. You can trade on Forex anywhere in the world. The only thing you need is a stable internet connection.
- Sound liquidity. You can make money in real time: here and now. There was and there always be demand for currency.
- The opportunity of forecasting.
Quotations for currencies change every day. A fall is usually followed by a growth spurt, due to which it may be quite easy to forecast the situation.
Yet another plus of Forex is the opportunity for currency pair buy/sell process automation. To this end, special robot software was developed. They make newcomers’ and experienced traders’ activity easier allowing them to make big money. It’s enough to choose the proper algorithm and set the required settings.
How Forex trading robots can help you with auto trading
Forex trading robots are software able to independently read the fluctuations of currency quotations and make operations set by the trader. Robo advisors operate 24/7: with no days off and breaks. Thus, you may not worry about missing an important event. Moreover, automated financial software does not depend on human factor (anxiety, unwellness, negative emotions, etc.). when using a robot, a trader frees up his time.
As of today, there are numerous classifications of Forex financial robots:
· Scalping. This is the most common advisor type. These robots trade according to the Scalping strategy. In this case, the trader’s income is composed of revenues obtained as a result of many short-term transactions. A Scalping advisor can make several hundred transactions a day, which is beyond the scope of a common person.
· Flat and trend. Flat financial advisors operate only in set price ranges, and flat robots – only across the limits and the trend used.
· Multi-currency. The most expensive software. The advisors of this type trace changes in several currency pairs at the same time.
· Martingale robots. They trade according to Martingale’s strategy. The point of the financing strategy is to increase its rate until the trader generates a profit. This type of advisors is the most high-risk one.
· Arbitration and news. Arbitration financial advisors monitor quoted prices in several different banks or from different brokers. News robots analyze information obtained from economic news.
This is not an exhaustive list of possible financial robo advisors. To get a regular income and mitigate risks, you need to choose your helper in a wise way. The majority of software is developed according to the requirements of a certain trader. To take a look at robot possibilities, you can download a free trial. However, it is recommended to test it on a demo account.