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❑ learn the basics of investing

If you are just starting out, read this first to get an idea of what you can invest in. Also read our best practices for investing. We cannot give specific investment advice, just principles.

Start investing as early as possible. Investing when you’re young is one of the best ways to see good returns on your money. That is due to compound earnings, which means your investment returns can earn their own return. Compounding allows your account balance to grow faster over time.

Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.

— Albert Einstein

Before investing you need to do your due diligence. That means research the investment first. A simple investment is just putting money into a bank savings account. Find out first: how much interest do they pay? how easy is it to withdraw money from the account, is there any notice period? what is the minimum deposit required? is the bank itself stable or likely to collapse or have significant problems in the future? There is no point in opening an account with a bank that is close to bankruptcy or which has recently seen lots of customers leave.

If it is something else you are investing in, what do you need to know first? If you invest in precious metals, such as gold, learn as much as you can about investing in gold. If you are in the UK then buying gold sovereigns is a good place to start. Make sure you buy from a reputable bullion dealer, compare prices between several, and never risk buying a counterfeit coin.

How Much to Invest?

Do not invest more than you can afford to lose. Start small, do not invest all your life savings. Do not invest money you need right away, consider that if you need that money soon, can you get it out quick enough?

Due Diligence

Do your research, your due diligence, in any investment before you even consider investing. Find out as much as you can about the stock, the coin, or other investment, before you even consider how much to invest.

Diversify

Do not put all your eggs in one basket. Invest in different strategies where possible. If investing in one thing, choose a safe investment. Even if you decide on just one asset class, try to spread your risk via different investments or platforms.

Exit Strategy

Make sure you have an exit strategy — that is, how can you get your money out of the investment when you need to, or when you think the investment is not performing as well as desired.

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars. — Warren Buffet

❑ Different asset Investment Classes

When you start investing, consider all the different asset classes, and the pros and cons of each.

You could start off with one asset class, and later diversify to others.

Some assets require at least a certain amount of capital just to get started, and for some the entry levels are now very low, thanks to various online investment platforms.

Precious Metals

This includes gold, silver, platinum, and palladium. The most popular choices are gold and silver.

There are different ways to invest in them. Generally precious metals are considered a safe asset class.

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Crypto Currencies

This includes Bitcoin, Ethereum, Tether, various stablecoins, Cardano, Solana, XRP, Litecoin, Stellar Lumens, and more.

We are not referring to CBDCs, but rather the decentralised crypto currencies that you can invest in.

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Forex

This is short for foreign exchange, and is where investors convert their money between different currencies, in the hope that as exchange rates change, they can make money.

It is hard to predict if a currency will go up or down, and is not easy to invest in.

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Shares and Funds

Investing in the stock market and shares in private companies.

Many people invest in these, and you really need to know what companies you are investing in beforehand.

It is possible to invest in funds, where fund managers invest in shares on your behalf.

You could even start your own business, investing in that to make money.

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Property

Investing in a house, flat, block of flats, shops, retail properties, and so on, to let out the property to paying tenants.

Your own home that you live in is not considered an investment.

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Bonds

Governments borrow money from investors through bonds. Bonds might be considered a safe investment, but the yields are not high, and there is always risk.

In the UK there are also Premium Bonds which are quite different but worth looking at.

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❑ 10 best practices for investing

1. research first

Do your due diligence, do extensive research, find out as much as you can about the investment, and understand what it is and what it is not. Become an expert as much as you can, so you do not get tricked into a bad decision.

2. do not invest more than you can afford

Don’t invest more than you can afford to lose. Never borrow money to invest. No investment is a sure thing. If your investment goes to zero, will you suddenly be broke?

Do not gamble, do not speculate, unless you can afford to lose that money.

3. do not put everything into one investment

Do not put all your eggs into one basket, make sure you spread your risk via multiple assets or platforms.

4. invest for the long term

Especially in real estate. Don’t expect to buy one month and sell the next and make a profit; remember that it can take years to make money on an investment.

5. exit strategy

Make sure you have an exit strategy — that is, how can you get your money out of the investment when you need to, or when you think the investment is not performing as well as desired. Keep in mind that a quick exit will cost more money.

6. think logically, not emotionally

Never let emotions get in the way of an investment, put them aside and come back to the idea when you can think things through logically. Think like Mr. Spock in Star Trek.

Avoid FOMO (Fear Of Missing Out).

7. do not invest prematurely

Do not rush into the next big thing. Some YouTubers and influencers will telling you to invest in something, and tell you that you have to do it now. Avoid any investment with a time limit to get in.

Avoid anything scammy or that seems too good to be true.

8. read contracts carefully

Always read agreements, contracts, and other documents carefully. Never sign anything or agree to anything that you do not fully understand or know what you are getting into.

9. count the cost

Always calculate the costs of investing. Some investments require ongoing fees to maintain, some will require a fee upfront. Consider the total costs before investing.

10. Don’t panic!

Don’t Panic! As per the cover of the fictional guidebook in the famous story by Douglas Adams, called “The Hitchhiker’s Guide to the Galaxy”, don’t panic if things do not go as planned. Some investments will look like they are losing money for a while, especially in volatile assets, such as crypto currencies and shares. Have stop-losses in place, but be aware that a volatile asset may appear to be losing money at times.

Something like Bitcoin has dipped very low multiple times, but always gone back up by several multiples. Investing for the long term means you do not have to worry about fluctuations in value.