Newbie Investing
Newbie Investing
Written by Nik Rainer | 5 minutesA simple way to delve into investing is by reading a book. Popular among both novice and advanced investors is the evergreen Investing for Dummies, written by the author of this article. Don't be shocked, this article will not be a book review. We would like to share a few learning
points with you.
Sport and investing
So sport and investing have a lot in common. And there is another parallel. When building and maintaining an investment portfolio it can be useful to think like a coach; a soccer coach for example. A coach does not send ten keepers and one attacker into the field, but ensures a balanced team.
Distribution across asset categories
Next, it is important to think about how you divide your assets between the available investment products. That can be quite a challenge. Understandable, because building and maintaining a portfolio is not part of their daily work for most investors. What helps: in addition to cash, limit yourself for convenience to the main categories of shares and bonds.
Lifecycle investing
Those who apply the rule of thumb, however, shift the portfolio's risk with the passage of time from shares (higher risk) to bonds (lower risk). In professional terms this is also called lifecycle investing. You take less and less risk with your investments as you get closer to your target date on which you want to dispose of your assets to, for example, repay the mortgage. In practice, I notice that the rule of thumb, in addition to support, also offers investors peace of mind. And peace and quiet, in my opinion, returns are often beneficial in the long term.
Which analysis form do you use?
The broad lines for a balanced team and the rules are known, but how do you select the right players? With a broad midfield consisting of investment funds and ETFs, you can easily spread smartly. However, before you buy an individual stock or bond, it is important to make an analysis to justify your decision. You can use various forms of analysis for this. The best known are the fundamental and technical analysis, often referred to as FA and TA. These two movements are roughly opposite each other.
Basic analysis
A selection of fundamentally good shares takes place in steps, whereby you filter the information through a funnel. The first phase of the selection process concerns the level of the international and national economy, the macroeconomic level. The most important question is: in which region or countries is it economically summer or winter? The development of the "gross national product" (GDP) and employment (unemployment) are two variables to keep a close eye on.
Technical analysis has two variants: visual and statistical technical analysis. In the visual variant, graphs of historical rates are studied, in the statistical application calculations are made on series of historical rates. In both cases with the aim of charting the most likely price trend. Note that Technical analysis is only a tool and of course has no 100% predictive value.
An important part of your total return is dividend. It is useful to pay attention to this when selecting your midfielders.
Author
Nik joined BinckBank in 2016 as part of the team responsible for rolling out the Saxo Bank international service. Nik has held positions at various banking institutions such as Hambros Merchant Bank, Standard Chartered Bank and Morgan Stanley and brings his solid financial background to the role. Working with the development of new client services and relationship management, Nik also contributes to local publications and forums.
The information in this article should not be interpreted as individual investment advice. Although BinckBank compiles and maintains these pages from reliable sources, BinckBank cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk. We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks.
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