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The 3 Principles in Investment for Beginners

The 3 Principles in Investment for Beginners

For beginners and those who are just exploring the world of investment, here are 3 main principles of investment that you need to know before starting. On the other hand, you may also need to learn more about investment mis selling, so you understand more about one of the biggest risks in investments.

1. Know that investing is a commitment

The principle of investing first is about commitment. Investing is the same as building a relationship. Both require patience in the building process.

There are many investment options available and you can choose. However, don’t forget to think about the pros and cons of various instruments before choosing the one that best suits your goals.

In terms of investing, time also plays an important role. Some investments allow you to disburse with a relatively fast maturity date, while there are also some investments that take a long time to withdraw.

Besides time, risk must also be an important consideration for you. The higher the investment return offered, the greater the risk. Try to balance the investment portfolio to suit your tolerance for risk.

2. Invest When You Have Enough Savings

Everyone has a different benchmark for how much “enough” savings. However, it is important to have the amount of savings that can meet your needs in the next few months before you invest the money. The value of three months of deposit funds is a good minimum amount, while the value of six months is safer.

Why is that? This is certainly a step in the future.

3. Pay attention to the Inflation Level

Sometimes the income earned from savings has insignificant amounts, even when you take into account the bank admin fees, your savings will usually still have the same nominal over time.

Inflation is the reason why you need to invest. The investment makes you able to stabilize your purchasing power in the future.

To overcome this, the return on investment must defeat the national inflation rate, so choose the right type of investment in this case.

Don’t just choose a type of investment that is safe, but it is very unsafe if it is calculated with the value of inflation. Be wise in considering it!

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