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How to start investing in 2024? Choratas Estates LLC answers

·3 mins

So what do you need to start investing? The first step is to define an investment strategy. It will determine what percentage of your funds should be directed to high-yield investments such as stocks, commodities, and contracts for difference. And also what share to allocate for investments with minimal risk. It is this combination that will help create the optimal investment portfolio. You also need to figure out what suits your goals better - short-term or long-term investments. If you are investing to generate additional income but want to keep working at the same time, long-term strategies are more suitable for you. If you are ready to invest a lot of time in this, then you should pay attention to short-term investment strategies.

The level of acceptable risk is affected by the period of time in which you need to achieve financial goals. If you have years before you need the funds, you can bet on high-yield, higher-risk investments, because even if you fail, you will have enough time to recover. If you have a few years or even months, you can bet on investing with less risk and lower potential return. A high-risk, high-return investment strategy would include a portfolio of more stocks or even cryptocurrency CFD trading. While a low-risk investment strategy may include more defensive stocks and bonds.

Remember that there is no exact formula for investing. It all depends on your financial situation, financial goals, risk appetite, and investment horizon. Each investment, in addition to the benefits, is associated with certain risks. Investments in the assets we have listed carry different levels of risk and therefore have different potential returns. Below we will consider the main risks in trading and investing:

  • Market risk is the risk that the market price of an asset in which you have invested will decline. This is the main risk that most investors worry about.
  • Inflation risk – occurs when inflation exceeds the return on your assets. Currently, bank deposits are a clear example of this.
  • Liquidity risk is the risk of not selling your investment when you want to. This risk is mainly typical for real assets, it is much less in financial markets.
  • Concentration risk is the risk that arises from holding too much money in one type of asset.
  • Currency risk is the risk associated with investments in foreign assets (currencies, securities, real estate, etc.). A possible negative change in the exchange rate of a foreign currency against the national one may adversely affect your profit.

Of course, these risks can be actively managed with the right stock buying, diversification, and risk management strategy.

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