The development of the 4.0 technology era is also the time when online financial investment forms are more interested, especially young people. They are people with sharp minds and a desire to conquer financial freedom
What is financial investment?
Financial investment is simply understood as the use of idle money to invest in stocks, securities or other financial instruments to seek profitability and increase the value of the initial capital. Roughly speaking, any investment that helps “money make money” is considered a financial investment.
Why should participate in financial investment?
In fact, everyone knows that the main purpose of financial investment is to accumulate assets and increase income. However, besides those common interests, there are still many other important reasons to convince us to participate in financial investment as soon as possible. Specifically:
Anti-inflation
According to the time value of money principle, the value of a dollar today is always greater than the value of a dollar tomorrow. Indeed, to buy a bowl of pho in 2012, you only need to spend 20,000 VND; However, by 2021, to buy a bowl of pho like that, you have to spend an amount of 40,000 VND.
Financial investment will help you fight inflation (devaluation of the currency) and increase the value of your property. If you don’t invest financially but just keep your money in a bank account, inflation will eat away at the value of your money.
Increase capital
Financial investment offers the opportunity to earn on idle capital. The economy operates and develops mainly on investment activities. If you know how to invest effectively, you can get a large amount of profit after a certain period of time.(Read more : Copy Trade)
Generate automatic income
Financial investment from idle money helps bring passive income for traders, and helps them quickly achieve financial freedom. You just need to spend some time besides your main job, to learn the financial instrument you invest in and make a profit from it. The larger the amount accumulated from financial investments, the sooner you will be financially independent.
Achieve big financial goals
Financial investment helps you achieve big financial goals such as: buying a house, buying a car, running a business or investing for your children to travel and have enough accumulated money to live “easily” after retirement. .
Develop yourself
In addition to the above goals, financial investment helps our minds become sharper and wiser in making money. Because the more you invest, the more you have to learn and learn a great deal of knowledge in different fields. From there, you will have a more comprehensive view of the market so as not to miss potential profitable opportunities.
In short, financial investment that can bring great profits, always has great risks, the more risks, the more opportunities. So don’t hesitate and start participating and learning about financial investment right now. Remember, cash flow never rests, cash flow is dead cash flow.
Popular financial investment channels
After understanding the importance and great benefits of financial investment, you will surely wonder which asset class to invest in to get the most stable and attractive return. Here is a list of 8 effective financial investment channels that you can refer to:
Invest in gold
Buying gold for reserve is a traditional and familiar form of investment for Vietnamese people, but this form of investment has never been outdated.
Advantages:
Gold is seen as an asset that never loses value and is the perfect tool to fight inflation. Therefore, hoarding gold is a safe, stable, long-term and highly liquid investment channel (that is, it can be exchanged for cash at any time).(Read more : price patterns in forex trading)
Moreover, buying and selling gold is also very convenient and fast.
Defect:
Investing in gold requires a safe place to store gold to avoid theft
The percentage return of gold is not too high.
Bank savings account
Advantages:
This is the safest and least risky form of investment, helping you to get regular profits and also quite high liquidity.
Diverse savings packages including: term/non-term savings, fixed/floating interest rates, etc.
Defect:
Savings bank accounts need to be invested for a long time to earn stable interest. If you withdraw money before the maturity date, you will only enjoy a very low interest rate of the payment deposit, usually only 0.1 – 0.15%.
On the other hand, the bank deposit interest rate is not much higher than the inflation rate.
Real estate investment
Real estate is a type of long-term investment, including popular forms of investment such as: subdivision to sell the ground, rent a house, buy a house and then resell, …
Advantages:
Real estate investment will bring great bargains if you choose the right potential project.
Real estate never drops in price, so investing only profits, not losses
Defect:
Buying and selling land requires a huge amount of capital, extensive relationships and needs to spend a lot of time and effort to find out the future potential of projects.
Normally, the liquidity of real estate is not high, so it is difficult to invest effectively in the short term.
Stock investment
This type of investment has an attractive return and attracts the majority of participants of different ages.
Advantages
Securities is a highly liquid market and does not require too much capital to participate.
If you know how to invest effectively, the potential interest rate can be 50% or even more.
Low capital because you only need 5-10 million in hand to enter the market.
Defect
Investing in the stock market also carries certain risks. The best advice for you when investing for a long time is to buy stocks of reputable companies that are leading the industry and doing good business in the market. Although the growth percentage of these companies is not too high, it is sustainable and steady.(Read more :swaps fees)
Forex investment
Forex is a financial investment channel that can help you earn big profits in a short time, but also has more hidden risks than other financial markets. Forex trading floors operate 24/7 from Monday to Friday, so traders can participate in placing orders whenever the market is open, not limited to office hours like the stock market.
Advantages:
The market is highly liquid, trading is instant.
Profits can be made in both rising and falling markets. It can be said that this is the duality of the Forex market.
Defect:
With high risk nature, so before participating in this market, investors need to grasp the basic knowledge of finance – currency as well as understand the rules of the market, to avoid “falling down”. “before the big waves.
Financial investment fund
Basically, investing in financial funds is simply your investment and does not need to do anything else. The fund’s team of experts will invest in other potential financial instruments on your behalf to earn profits. If the investment fund is profitable, you will benefit and only lose a small amount of fees.
Advantages:
Most funds are established by professionals with many years of experience, so it is quite safe.
If you want to find long-term profits but do not have in-depth knowledge of financial investments and do not have much time to sit and observe the market all day, financial investment funds are the perfect choice. .
Defect:
Financial funds often have specific requirements for participation time, so you need to carefully read the rules and consider before joining to avoid giving up halfway. Because if you want to finish before the scheduled time, you will not be paid the full amount of capital, and even be penalized for a few additional fees, which is not beneficial for both you and the investment fund.
Bond investment
Investment in bonds is probably a type of investment that is quite unfamiliar to Vietnamese people. In essence, a bond is a form of borrowing money from bond issuers (government, banks, businesses, …) with investors (bond buyers). Bonds are also known as debt securities. At maturity, investors will be paid both principal and interest from the bond issuer.
Advantages:
This form of investment has a higher interest rate than a bank and is quite safe, typically government bonds.
Not affected by the company’s business.
Safe and not much volatility because bonds are issued by government agencies.
Defect:
The enterprise cannot afford to pay the debt to bondholders due to a loss in business.
You have to spend a large amount of capital from a few dozen to several hundred million dong to get a high profit.
Cryptocurrency Investment
Cryptocurrency is a form of digital currency that is not issued by the government and is therefore also unregulated. Currently, on the market, there are thousands of different large and small coins to help diversify investors’ portfolios.
Advantages:
Cryptocurrencies do not depreciate, if the project is good, it will only increase, not decrease. Therefore, investing in coins can help you get rich quickly and get the highest returns of all types of investments.
The amount of capital to spend is very low with new coin/token projects
Low transaction costs, high security of cryptocurrencies.
Defect:
The market is very volatile, so you can completely lose your account and lose big after only a few nights if you don’t know good risk management. So if you want to invest in cryptocurrencies, you always have to be extremely cautious.
Because it is not regulated by the government, this form of investment is very easy for criminals to launder money. At the same time, it is very easy to hack and lose your account.
How long should the financial investment be?
In fact, the question of how long to invest is not important, because the best answer is always to invest as long as possible. However, in each period, you can choose one of the two investment methods below to suit your conditions and goals at that time.(Read more :Leverage in Financial Trading)
Short-term financial assets
Short-term investments usually have a term of less than 1 year (it can be a few minutes, a day, a week, a month to several months). This form is suitable for traders who follow the surfing school, the speed of capital flow is very fast with the desire to make quick profits.
The advantage of short-term investment is that traders can build the clearest and most specific personal financial strategy, the goals set in the near future are easy to complete. Moreover, short-term investment also helps you to relax your mind and have a feeling of excitement and positivity when you recover your capital and profit quickly, without worrying about your capital being frozen in place.
However, short-term investment also has certain limitations such as: low profitability, high risk when the market fluctuates strongly, having to reinvest continuously makes you always have a headache looking for new opportunities, … Therefore, this type of investment will not be suitable for novice investors, but only for experienced and market-sensitive traders.
Some typical financial instruments that can be invested in the short term are: stocks, treasury bills, certificates of deposit (term less than 12 months), forex, virtual currencies.
Long-term financial investment
In contrast to short-term investments, long-term investments have a duration of more than 1 year, are less risky and also yield a greater return. However, a very slow capital turnover rate can cause investors to bury their capital. Therefore, it is imperative that they develop a specific and clear investment plan, with a strong mentality to avoid standing on this mountain and looking at that mountain.
The time for investors to recover capital and interest can last up to several years. Therefore, in order to maintain a good long-term investment, you need to accurately calculate the investment amount and time; At the same time, there are financial provisions to prevent possible risks so as not to break the original plan.
Some popular long-term investment forms today are: real estate, demand deposits, bonds, securities, etc.
Effective financial investment steps
Financial investment is the movement of cash flow and always contains unexpected risks that directly affect the quality of work and life of investors. Therefore, to achieve the goal of financial freedom, each investor needs to have a clear strategy and direction to suit their own needs and conditions.
The following are effective and safe financial investment steps that you can refer to:
Step 1 : Prepare investment capital.
The first step in the investment process is that you need a certain amount of capital, and it is best that this capital should be idle money to avoid psychological pressure.
Step 2 : Build an investment strategy that best suits your goals.
Investment goals can be buying a house, buying a car, taking care of children, hoarding in old age, etc. It is extremely important to clearly define the goal, it helps to be more solid to pursue the investment plan in the future. long-term.
However, no matter which investment method you choose, the most important thing is to constantly learn and improve your knowledge. Remember, investing in yourself is an investment that never fails.
Step 3 : Select financial assets to invest within the allowed capital.
As introduced above, you can choose a number of investment forms that are suitable for your financial ability. Note that, when you are just starting out, you should only use a small amount of capital to get used to it. After trading proficiently, it is not too late to increase your investment amount.
One risk issue that traders need to keep an eye on is inflation. To invest effectively, choose financial assets that give you returns significantly above the rate of inflation.
Step 4 : Always follow the set investment plan.
Remember, the higher the return, the greater the risk. Therefore, in cases where you need to know how to stop loss at the right time (usually 6 – 7% of your account), don’t become a stubborn investor going against the market.
Finally, always stick to your goals to make the most of the power of compound interest.
Notes when investing in personal finance
No matter how well you are an investor with good risk management, mistakes and failures are inevitable in the market. So, to minimize unnecessary losses, you need to keep in mind some important notes when making financial investments:
There should be no lack of planning in personal financial investments. Creating a plan that is as clear and detailed as possible in every action is the habit that makes you a successful investor.
Always prepare contingency plans for unexpected risks.
Should consult and consult with experienced investors when you are new to the market, they will give you a more correct perspective.
Absolutely do not use borrowed money for financial investment if you do not understand the market well, because the possibility of failure of investors is always very high.
Effectively manage risk by diversifying investment portfolios and always balancing risk and return (R:R)
Always be alert and use reason when making investment decisions. Investing needs logic and acumen, not emotions.
Conclude
Thus, the above article is the entire basic and important knowledge system related to financial investment . Hopefully the above information can give you some suggestions on how to build a personal investment strategy in the near future. No one can predict which financial investment channel will bring the most profit, but we can completely choose the investment form that suits our needs and goals.
Good luck!
