Nowadays, investing gives people plenty of food for thought. Any of us is wondering how to invest savings with the aim of gaining utmost profit. Recently, popular mass media has made big splashes among financially conscious people who encounter stories about an incredible rally in stock markets, all-time records in the crypto market, and bullish prospects of precious metals. However, making a decision on investments in financial markets is a crucial step. You should clearly understand the nuts and bolts of the process. Now let’s try to figure out how to make the first investment, pick a reliable brokerage company, and earn nice profits.

What is investment about?

Before you answer the question about how to invest, let’s look into the concept of investment as such. For a start, investment is buying an asset or financial instrument with the goal of generating income or saving one’s capital. Today we are going to expand on financial investments (i.e. investing in stocks and forex instruments).

Despite the fact that investments are aimed at gaining income, this method is not a sure-fire way to earn money. Importantly, any investment bears some risks, so an investor might incur considerable losses instead of a profit.

What risks should you beware? The thing is that the market does not always follow an uptrend but takes a nosedive that instantly slashes quotes of your financial instruments. Certainly, there are secrets of mitigating risks. The truth is that it is hardly possible to avoid risks completely.

One of the efficient ways to minimize risks in financial markets is to monitor news on the financial world and international politics on a daily basis. You can keep close tabs on fresh news and read analytical articles in the special section on the InstaForex website.

Commonly, investing is a long-term financial operation that is due in a few months or even years. Therefore, investors should be aware that betting on particular financial assets, they will be able to take profit in a long while.

Types of investments

This material is devoted to financial investments. We would like to introduce you to the most popular types of financial investments: stocks and FX instruments.

Stock investments

Perhaps this is the easiest way for beginners. In essence, a rookie investor buys shares of large companies and sells them some time later at a higher price, thus making a profit.

As it turned out historically, equities of global corporations keep going up year after year. Thus, anyone is able to capitalize on this non-stop uptrend anytime. For this, it is enough to open an account with a reliable broker and dive into the exciting world of stock investors. Notably, this process is surprisingly easy and fully automated. To register an account at the InstaForex website takes no more than three minutes.

Forex investments

Before we gain an insight into this type of investments, you should grasp the point what Forex is like. Well, Forex is an international currency market where traders buy and sell currencies and make exchange transactions. By the way, Forex is one of the most popular markets among rookie investors.

This investment option is distinguished by one particular feature. It does not make sense to buy a currency and wait for its appreciation for years. It frequently happens that a novice investor who had just turned one’s hand to investing becomes a keen trader very shortly. Forex stands out among other financial markets because quotes of currency pairs fluctuate all the time so that investors have to buy and sell trading instruments frequently. Therefore, Forex offers a great advantage as traders can earn both in the bull and bear markets.

Though the concepts of an investor and trader are broadly similar, they do not have the same meaning. An investor pursues a strategy that requires more patience and prudence. An investor executes fewer transactions and opens a trade for a longer term than most traders.

Step-by-step guidelines on investing

If this material has aroused your interest in the world of investments, we suggest that you should get to know the step-by-step guidelines for beginners.

Step 1. Learning investment skills

Check out professional guidelines, watch video tutorials on YouTube, take training courses, and read articles on the Internet. These resources open the way to your solid financial background. Besides, a lot of brokerage companies hold learning webinars for novice investors. Importantly, beginners who doubt their own investment abilities should take the opportunity to practice their skills on a demo account with no risks of losing their funds.

Step 2. Decision on brokerage firm

Seeking the right broker, one of the essential criteria is to check whether a company holds an international license for brokerage services. Importantly, a broker should give its clients a choice among several trading platforms and a gamut of popular financial instruments. For example, InstaForex offers its clients access to more than 300 assets to trade.

Step 3. Portfolio diversification

It would be a wise decision to purchase securities of companies from various sectors. Financial markets operate in such a way that a decline on oil quotes instantly throws a punch on stocks of all companies in the oil and gas sector. Thus, buying securities of companies from various sectors you cut your own risks or, speaking in professional terms, diversify your risks.

Step 4. Strategy development

Every novice investor should work out one’s own strategy to stick to in investment decisions. An investment strategy is an array of features to define your individual style in the market. Among these features, there is a composition of your investment portfolio, frequency of buying/selling assets, criteria for decision-making, a term of investments, etc. At the preliminary stage, make sure you determine the utmost size of losses that you can afford and an amount invested per month. In addition, you should decide whether you are going to make short- or long-term investments.

Conclusion

Every newcomer to the stock market must be aware that investing in financial markets may bring both hefty profits and heavy losses. Therefore, you should bother learning all specifics, advantages, and pitfalls of this venture.

Importantly, you should not plunge in a dubious bonanza as it might appear not as lucrative as it seems at first glance and you might end up losing your capital in full. At the same time, if you understand and reckon all consequences of being an investor and can spare some funds for this activity, investing could open the door to your financial independence and well-being.