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Tips to kick Start Your Investing Career

28.01.21

"The biggest risk of all is not taking one." — Mellody Hobson

Crippling Indecision

They say the price of inaction is far greater than the cost of making a mistake. People who are paralysed by indecisions or the fear of making a mistake subsequently do nothing and miss out on a multitude of opportunities in the process.

Statistically speaking, the broad equity market has continued to reach higher and higher valuations since inception, so the probability of success rests firmly in the investor's favour. On average, the stock market has returned around 10% annually since 1974 (without factoring in inflation). A far more enticing return than the pennies on offer in your savings account.

How many millionaires do you know who have become wealthy by investing in savings accounts?

Playing it safe

If you’re young, go long, take some risk. You have time to weather the inevitable pits and troughs of the market and still emerge victorious.

With that said, don’t rush out and throw all your money into penny stocks with dreams and aspirations of guaranteed riches. Remember, the number one rule in investing is ‘stay in the game’ so make sure the risk you take is calculated.

Older investors don’t have that luxury of time. You know the expression “time is money?” Nowhere is that more true than in the stock market. Use your time when you’re young to invest in assets with the potential for long-term growth.

Emergency funds

Risk and volatility are ever-present, but thankfully, we can take steps to mitigate these risks. One such step is to set up an emergency fund.

Far too often, novice investors throw all their savings into stocks thinking they can sell them off whenever they need the money back. This isn’t a bank account. If you need the money in the middle of a downturn, you may have to sell at a loss.

Emergency funds create a financial buffer that can keep you afloat in times of financial strain, preventing you from dipping into your portfolio at the least opportune time.

The need for an emergency fund should not be overlooked. It is a hugely important factor, providing you with the freedom to invest in the market long-term, without interruption.

The size of your emergency fund will depend on your financial circumstances, but a good rule of thumb is to try and gather between 3 to 6 months of living expenses. If you have a mortgage, kids etc., you may want to be on the higher end of this. If you have few overheads and strong job security, then 3 months may work for you.

All of your emergency funds don’t necessarily need to sit in cash. The majority of this can sit in a money market fund. These funds are intended to offer investors high liquidity with a very low level of risk; unfortunately, they offer low returns to match.

For many, the stock market and investing in general may seem daunting, but by taking steps to put a well thought out and diversified investment plan in place, you can mitigate much of your risk and expose yourself to stable returns that will continue to compound over time.

At Holdun, we manage our family’s money alongside that of our clients. If you would like to learn more about Holdun Funds, see below:

Holdun Income Fund

Holdun Opportunity Fund

Holdun Funds Real Estate

Find out how Holdun can help you create a brighter financial future by reaching out to us at info@holdun.com. We look forward to hearing from you!

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