Here's what you need to know before investing

The basics

First of all, you should ask yourself why you would like to invest. Are you looking to finance your children's education, prepare for your retirement or invest in real estate? This will help you to have a clear vision and to structure your approach.

Your timeline

Meaning: When do you need the money from the investment? Your investment choices will be different depending on whether you want to collect your capital in five years or fifteen years. The shorter the maturity, the more important it is to choose low-risk investments to try to "secure" your capital yield as much as possible.

The amount

Estimate the amount you need to set aside to achieve your goals and always keep separate savings available. It is important to always invest and save at the same time as you will need back-up savings for unforeseeable hardships (urgent car or home repairs, etc.). These savings should equal about three to six months of your wages. In short, keep a buffer for unforeseen events and short-term projects and invest part of your capital for your longer-term projects.

Your risk

With every investment comes risks, for example the risk of losing money. If you have invested into one company or one market only, there is a high risk for you as it is uncertain if that company or the market will remain stable. This has been well observed in the automotive industry over the last few years. Suppose you invested into that industry or a specific company in that industry, you would be out of luck. You can prevent this risk by diversifying your investment portfolio and choosing multiple options. You can also opt for investment funds or periodic investment plans or entrust your investment portfolio to professionals.

Don't rush into anything and don't put all your Easter eggs in one basket. Educate yourself, do your research and consult experts who can help you better assess your situation.

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