It’s important that I start this blog by saying that I am not a financially savvy person. Sure, I am able to save properly and budget accordingly but that’s as far as it goes. I don’t even believe in having a credit card (big gasp!). So when illio took me on – it was with a steep (but very exciting) learning curve, that I picked up what it is we do and why. As well as learning all about the business I work in, I had the pleasure of being introduced to the world of investing by traders, analysts and financial experts. Needless to say, I’ve picked up a couple things already.
These may not be ground breaking, but for anyone looking to start getting into investing, here are six things I have learned while working at a Fintech for the last 3 months:
1. Diversification is key. No matter how you look at it, or who you talk to, not putting all your eggs in one basket is important to ensure you minimize your overall risk when building your portfolio.
2. Did I mention that diversifying your portfolio is important? Investors should look at diversifying across regions, industries and asset classes. It’s great to diversify in one of these, but if all your diversified investments are based in the US, and the economy in the US crashes – you’ll be hung out to dry. Therefore, consider looking into different categories, markets and asset types.
3. There’s a lot more effort that goes into building a portfolio than just selecting the right assets. Avid investors rely heavily on self-built excel sheets, or portfolio aggregators, to keep an eye on their asset allocations across their investments. Deciding you want to invest in Alternatives isn’t enough, and neither is deciding what kind of Alternative you want (I’d go for wine) – but looking at Alternatives within the overall portfolio, what percentage will you allocate to this asset class, in which part of the world are you investing in Alternatives, how does this affect your risk levels? All of these decisions need to be part of the process. Looking for a great tool for this? Consider illio *cough* *cough* ;)
4. You’ve made some great decisions, invested in a number of different assets, across different markets. Now what? It’s vital that you keep an eye on your overall performance and make sure you are rebalancing your portfolio. If one of your assets is sky rocketing, it might be worthwhile celebrating for a little, but then, you’ll may want to consider rebalancing your overall portfolio allocations. Take advantage of the hike, but don’t lose your initial plan. If crypto represented 5% of your entire investment, and the value has shot up, make sure you reallocate some of those funds elsewhere, to bring your risk levels back to your original plan.
5. Trading and investing are not the same. This might seem obvious to many of you, but as a newbie, I had always been terrified that investing would mean having to constantly keep an eye on the market, sell and buy different assets etc… But really, the long game is probably the best game (for me!), and choosing a handful of safe bets, investing in them, and leaving them there for a few years or decades is a perfectly good strategy.
6. ETFs are your friend. I had been "umming and arring" about what stocks to invest in, how to get my foot in the door etc. After a few chats, I’ve come to the conclusion, that going ahead with key ETFs and Funds that track the market, are usually a good choice – if you are investing for the long term.
I will leave you with this final thought: I have been thinking about investing my money for the last 5 years, but I’ve never had the courage to do so. Thanks to fractionalization, I was able to put only a couple of pounds into some funds that spoke to me and now I feel a lot more comfortable already having invested a few hundred. So, if you haven’t yet – then dip your toes in, it’ll make it a lot easier to dive right in.