Investing 101: A Starter's Guide

Looking to Invest? Check these handy tips first

Over the past year, the world of investments, cryptocurrencies, NFTs, and online trading has become the talk of every town, especially given the low interest rates on saving accounts and the rise of global investment apps. However, over the last couple of months, stock markets have been tanking. The S&P 500 and the Nasdaq logged their seventh straight week of losses, their longest losing streak since the end of the dotcom bubble in 2001. The Dow suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression. And Bitcoin is down nearly 40% in the last 7 weeks.

For some, this drop has led to losses while many are seeing this as an opportunity to buy. Whichever camp you reside in, one thing is for certain that people all over the world are now looking at alternate forms of investment and aiming to get better returns on their savings. However, it is easy to feel FOMO pretty fast. Here are a few things to keep in mind before you invest your hard-earned money:

1. Do your due diligence - Instead of jumping on the bandwagon and investing in the most ‘talked about’ or meme stocks, consider if you have any long-standing brand loyalties. It is a good idea to stick with companies that you believe in or have interacted with and know more about. It can be daunting if you are investing for the first time. There are more than 16,000 types of cryptocurrencies. Do you research on the type of digital assets and exchanges before investing.
2. Set objectives and start small – For beginners, it’s wise to get a hang of the market and its fluctuations first. You should align your investment behavior with your financial objectives and keep your exposure small. You can steadily increase the amount as you become more well versed with market. For a beginner investor, a good rule of thumb is to start with a basket of 4-5 different equities, digital assets, ETFs, etc. as it can be difficult to track multiple funds. Over time, you can diversify your investment by adding more funds.
3. Hang in there – Don’t expect quick returns…very few actually do. Most investors are in for the long haul. As investors we want the stock prices to be high when we are selling but not when want to buy. This brings market timing into play, which is a very risky strategy. There are strategies such as Dollar Cost Averaging (DCA) and Value Averaging (VA) which are generally advisable for investors with lower risk tolerance. You can research them to see if they fit your requirements. As always, all investment strategies have their pros and cons.
4. Stay aware: In the event of a political conflict or supply chain shortages or inflationary issues (as seen recently), the stock market is severely impacted. Once you are ready to invest, remember that most investment firms require you to transfer funds to an account on their platform before you can invest. Be aware that such international transfers can take a long time (sometimes over 5 working days). Hence many customers prefer to use their debit card for funding which is instant.
5. Choose a card with low foreign transaction fees or sign up for Liv. Prime and get all your foreign currency fees refunded. This can be a huge saving when you are trying to send funds to an investment account as well as allow you take advantage of the market situation.

Although local investment options are currently limited, you can look at some established global platforms. There are several routes to entering the world of investments: whether you choose to invest in gold, equities, foreign exchange markets or digital currencies, you can play the field and explore multiple investment options.

Let us know if this article helped.

Happy investing!

Note: Investments are subject to market risk. Please do your research before investing. Liv. does not make any recommendations on the type of investment or the platform you should use.