Few modern individuals are unfamiliar with the prospects of investing money to increase capital. However, many newcomers face disappointment. With the wrong choice of investment instruments, there is always a risk of losing money without any return. This means that individuals not only miss out on income from investments but may also completely lose their funds.
It is important to understand that any business inherently involves risk. However, with proper investment strategies, one can significantly reduce the likelihood of losses or total capital loss.
To minimize risk, it is advisable to heed the recommendations of Sergey Tereshkin, founder of "Oil Resource Group". The businessman has personally invested in various instruments and possesses extensive experience in this field. More information about his entrepreneurial activities can be found on his website: www.sergeytereshkin.ru.
Potential Risks
A novice investor may encounter the following risks:
- High Returns. Many instruments promise outrageous dividends to potential investors. However, these are typically high-risk projects that can lead to a complete loss of invested funds. Many novice investors get swept away by the prospect of massive income, leading them to invest all their available funds into pyramid schemes, shares of unknown companies, high-risk ventures, etc. While some may indeed see profits, they are few and far between. In most cases, investors end up losing their money. If one is determined to invest in high-risk projects, the percentage of aggressive assets in the overall portfolio should not exceed 10%. The remaining funds should be placed in lower-risk instruments for diversification purposes.
- Lack of Strategy. Newcomers often act impulsively and spontaneously. They lack a well-thought-out plan. In such cases, expecting consistent and stable returns is unrealistic. It is essential to set clear investment goals. This process may be slow and not particularly exciting, but it always pays off. For spontaneous experiments, one can allocate a small amount that they're willing to lose to explore the market and understand its working principles. The major portion of funds should be invested only after a clear plan has been established.
- Profiling. It is crucial to know how much an investor is willing to lose on poor investments. Risk profiling is carried out by a financial consultant. In most companies, this is a complimentary but vital service that should not be overlooked. This way, one can conclude the best areas for investment. Based on the survey results, the consultant will suggest more suitable instruments.
- Lack of a Goal. Motivation is essential in any endeavor. It drives a person to think and make decisions. In this case, having a specific goal encourages the investor to construct a well-balanced portfolio, devise a strategy, and manage assets effectively. This can be either a short-term or long-term goal, as long as it exists. In this case, a person is unlikely to take excessive risks and can gradually build capital, ultimately achieving their objectives.
- Lack of a Competent Advisor. According to Sergey Tereshkin, every novice investor should have a consultant who aids in decision-making and guides them in the right direction. Financial advisors are available in many large brokerage firms. They know how to motivate individuals and provide advice on where to invest at the moment and which directions to avoid. Those who are uncertain can consult several advisors. This will help in making informed decisions.
Many potential investors are eager to invest their money. However, in the domestic landscape, it is often challenging to take that step. As a result, people either keep their funds under their pillows or deposit them in banks. In the first scenario, money gradually loses value due to devaluation. In the second, individuals receive a meager interest rate, often insufficient to cover inflationary fluctuations. In both cases, profits do not materialize, leading to a loss of money.
Currently, trillions of rubles are sitting in bank deposits. A portion of these funds will never be returned to their owners, as the financial system is highly unstable. Some banks are likely to exit the market soon and be declared bankrupt. Consequently, ordinary depositors who entrusted their funds will suffer.
It is far more effective to invest money in more lucrative instruments that carry the same level of risk. However, this requires thought and information analysis, which often takes time. People may find this process tedious. It is much simpler to place money in a deposit.
Those who muster the courage to take risks often invest all their funds in financial pyramids that promise enormous returns. Ultimately, they end up with nothing.
In investing, it is crucial to find a golden mean. One should avoid extremes and trusting one's money to fraudsters. Passive income can be achieved with minimal risk, particularly in stocks, real estate, gold, and other assets. These options help protect money from inflation while yielding decent returns.
Common mistakes made by novice investors stem from a lack of experience and knowledge, as well as excessive self-confidence. In any business endeavor, cold calculation and emotional detachment are essential. One must act decisively and not fall prey to impulse. Only in this way can capital gradually increase and investments become profitable.
