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Friday, 9 June 2017

Finance Savvy : Investing -12 Things I have Learned.

So recently I started to get my finances in order. I did the grown up thing and started a pension . I also started a little investment portfolio. I have been massively inspired by Sugar Mamma and her 1000  dollar project. So I implemented my own version the 100 euro project. So far I have proudly managed to set aside 500 euros since the start of 2017. I have invested all of this and in the process of my investment journey I have learned the following things.
1) Research research research it pays to look into fees for stocks,bonds,mutual funds or EFTS. Watch the  percentage or you may well find your hard earned cash being gobbled up on fees.
2) How do you want to invest ? Stock broker or are you and online do it yourself trader. Both charge fees and therefore you need to decide what your comfortable with. I use Degiro. It charges very low fees and there are other online do it yourself trading options so do your homework.
3) What to invest in? Bonds are traditionally believed to be safer but not always. Shares and if so who is it the Apples or Microsoft's of this world. There are websites such as Justetf which will build a portfolio for you. I would recommend double checking and researching the stocks which these sites recommend for you to make sure you are comfortable with them.
4) Risk - this is such an important aspect. If you are the kind to lie wake at night worrying if you loose 100 euros then your cautious and there is no point investing in high risk shares. Shares and stocks are not a get rich scheme and you need to know what you are doing and unfortunately be prepared to loose money if you gamble. Sorry but it's true. I recommend Morningstar for research. I recommend you complete the Irish Life questionnaire to see what kind of investor you are.
5) Strategy -what kind of investor are you are you a day trader or a long term investor. Both are very different and require a different strategy.
6) Research again because the value of bonds and shares can go up and down in the matter of minutes. Before you buy decide how much you are prepared to buy for. If the stock is high maybe leave it until it falls to a price you are happy to pay etc.
7) Be prepared to make mistakes and learn - but do not gamble recklessly. I have saw stocks dipped and sold as I was afraid but I should have held on. I did not have a clear strategy when I started and so I chose some stocks that were not suitable for what I wanted out of my investments. It happens and its ok. Live and learn but don't invest lots until you are sure on a stock.
8)Tax man -you must pay stamp duty on shares when you buy them. Equally, you are taxed at 20-40% pending on your income bracket for any dividends you may earn and when you sell shares yes, the tax man needs to be paid again. This is in Ireland in other countries such as the UK, investing in ISA's I believe are charged lower tax. Look into your investing and in Ireland the most tax efficient way to invest is in a pension. 
9) Make sure you have built an emergency fund, paid off debt and do not put all your eggs into one basket with investing. Have a savings account and diversify your assets e.g. some in property, FTSE, S & P, manufacturing, technology. 
10) Most men have investments but not alot of women invest. Why is this? For me it took ages to get me head around it. I think consumerism is geared more towards women in terms of clothes, hair, make up etc. But it makes me worry about my fellow pink sistas because we should be owning our finances and looking after our future and being #girlboss.  
11) Its going to take time. Investing is like saving one step forward and 3 steps back so invest little and often. 
12) Do not keep up with the Jones in investing. Gold may be the hottest thing since sliced bread for John Jones next door but it might not suit your strategy. There is alot of different factor from age, investment profile, attitude to risk , disposable income, strategy etc. If someone gives you tips on investing and starts telling you Copper is the next sure thing listen but always, always do your homework. 

If in doubt seek the advise of a trusted financial adviser these are just some steps to get you started and some tips that I found. I am not a financial adviser and so these are based on my opinion and experience. 
Best of luck with it.

If you would like me to do an ABC of investing and explain some of the terms please let me know.

I would also love to hear others investing lessons and stories. Thanks :)