Understanding how the market and investment work can alleviate fear around investing. It also helps reduce anxiety when you are aware of all the variables at stake and how they influence each other. Here are the top 8 investment for beginner’s podcasts to listen to for guidance: einvestingforbeginners.com/top-investing-podcasts
The attitude of a risk-averse investor means that your focus is mainly on the preservation of savings and wealth. Let’s delve a bit deeper to explore your opportunities.
10% to 20%
Experts recommend setting aside at least 10% to 20% of your income for investments.
Investing vs Saving
The decision of whether to save or invest depends on several factors. The first is, do you have a decent amount of liquid cash for three to six months of expenses in case of an emergency? If the answer is no, then it is important that you start saving towards your emergency fund to secure yourself.
If your answer is yes and you have set aside money for emergencies then it’s a good option to invest a percentage of your income, as investing for the long-term puts your money to work and helps it grow. It’s important to note that if the inflation rate exceeds the interest earned on your savings account, then you end up losing money in the long run. So, putting your money away into a savings account and hoping to earn off it is not the best strategy.
Experts recommend setting aside at least 10% to 20% of your income for investments. However, you should be aware of all the risks and volatility that accompany any type of investment. Speak to a reputable financial advisor to understand which investment opportunities suit your lifestyle and risk appetite
Insightful Tips and Resources
6 steps to overcome investment fear and help your money grow.
The fear of the unknown and financial loss is one of the biggest factors that discourage a lot of people from investing. If your knowledge about investing is limited, it can feel like an impossible task to get started. To put your mind at ease and concerns to rest, we have outlined a few steps you can take to break the cycle of investment fear.
Step1
Educate yourself about investment
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Set clear goals
Write down your financial goals and set a timeline against them. The excitement of reaching the goal alone will give you enough motivation to work towards it and be consistent.
Analyse your risk tolerance
You need to determine how much of a risk you are comfortable taking in order to get higher earnings, then build your approach accordingly. If you are open to a higher-risk investment you must be open to the chance that it might incur higher losses than that of a lower-risk investment. Acknowledging that will make you feel more empowered because the choice lies with you.
Choose a strategy that works for you
When it comes to investing, consistency is key. So, find a method that appeals to you. You may want to take a closer look at your spending habits and introduce a few tiny changes that help you save more money that you can invest. Start small, but stay consistent, even if it means saving 1% of your pay. When you make it a habit and see the earnings, you will automatically be encouraged to save and invest more.
Set a limit and forget about it
Out of sight is out of mind, and that stands true of money too. Setting up an automated savings plan every month that puts a set amount into a dedicated portfolio of investments is the most ideal way to ensure consistency. This routine takes away the human intervention that leads to emotional mistakes surrounding the investment.
Don't get discouraged or panic
When it comes to investment, things do not always go as planned. Market shifts, socio-political instability, and economic volatility lead investors with risky plans to panic. The ideal way to kick start your investment journey is to start small, learn from your mistakes and then move forward accordingly to minimize your losses. If you have assessed your risk appetite and chosen a portfolio that aligns with your investment goals, you're more likely to recover from the losses.
How inflation reduces your savings
If your long-term financial strategy is to put away all your earnings into a savings account, hoping for it to grow and secure your future, you need to think again. Most people are afraid to invest as they fear the risk of losing their money. The truth is that you already risk losing money if you keep it in a savings account for long periods of time because it gets depleted by inflation.
Inflation is the rate at which the price of everyday goods and services changes, and often increases, over time. Inflation doesn’t only impact your savings; it affects how much you can afford in the future because it weakens your money’s purchasing power over time. With inflation rising so sharply, planning your finances and retirement is more crucial than ever. One of the proven ways to beat inflation is to invest your savings for a better return, keeping in mind your risk tolerance of course.
If you wish to speak to an expert to explore your opportunities, please contact our Investment Management team at +971 2 692 0609 or email us at fundmanagement@bankfab.com.
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Cautious Investor
As a cautious investor, you are willing to accept very small sporadic losses, with your primary focus being capital preservation but also generating slightly higher returns.
Moderately-Cautious Investor
As a moderately-cautious risk investor, your financial strategy is that you are willing to accept some moderate losses in capital, on occasion, but maintain a balanced approach by evening it out with conservative and low-risk assets. If this sounds like you, we have a few insights for you to consider.
Moderate-Risk Investor
As a moderate-risk investor, you are seeking long-term growth of your wealth, apart from your income. You have a mindset where you are more open to accepting more significant losses in the short-term considering your focus on the long-term returns. Let’s consider a few insights that align with your financial strategy.
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