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Can I invest risk-free?

Step 3

Investing involves risks. So it’s a good idea to learn a bit more about the risks involved. We’ve said it before and we’ll say it again: you could lose all or part of your initial investment. However, there are ways to limit the risk, including for novice investors.

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Step 2. Is investing right for me?

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Target

Step 4. How do I set my strategy?

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Know what you’re investing in

It may seem obvious, but only put your money into investments you understand, even when investing in high-profile companies or funds. This will help you to understand sudden drops and hikes, which in turn helps you to keep a cool head. Impulse buying and panic selling are never a good idea. There are also complex investments that carry additional risk. If you invest in those without knowing exactly what you’re doing, you may end up with more extreme losses.

It is also very important to understand all the fees and charges. What fees are charged when you buy or sell? And don’t forget about the service fees you pay your bank or broker, and the fees that may be attached to an investment product. These fees may have a great bearing on the potential returns. In step 4, we’ll tell you about all the different fees and charges.

Don’t buy everything at the same time

It can be tempting to wait to buy until the price has dropped to a low point. But when is that? No one can predict it. You can, however, buy your investments at different times, so that your purchase prices will be more of an average price. Do this yourself, or automatically through periodic investing. This means investing a fixed amount at set times, so that you can absorb the highs and lows on the stock market.

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Spread your risk over multiple investment vehicles

If you put all your money into one or a few investments, you may expose yourself to greater risk. It is better to buy various investment vehicles, such as shares, bonds, or funds. Make sure you also spread them out over different industries. If you invest only in tech companies, for example, you will be vulnerable to losses whenever the tech industry hits a rough patch. For an even better spread, you can buy investments from different countries and even continents.

Good to know: ETFs and investment funds offer an easy way to spread your money over different investment categories, companies, and countries.

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Don’t just look at past performance

Share prices from the past few years are not enough to go by when making your investment decisions. They do not guarantee the future value. Equally important are market conditions, geopolitical developments, and the economic outlook, all factors that have an impact on both big and small companies. Yet another reason to spread your investments.

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Give your investments time

One of the biggest challenges for any investor is to keep a cool head. There will always be times when stock markets drop and your investments lose value. Or times when some prices soar but your investments lag behind. Think of investing as a marathon and that the finish line is nowhere near in sight. You’re better off sticking to your chosen strategy.

On to the next step

You’re already on the right track! In step 4, you’ll learn more about setting your goal, your budget and your risk level. And of course, about the costs involved in investing.

Investing involves risks

Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.