How exactly investment works and what to look out for is unclear to many people. This is partly because there are countless investment options, but also because of the complexity and depth of the subject. Before you delve into these depths, read this blog post as an easy introduction. We have compiled the 5 most important investment rules for you:
1. Only invest money you don’t need to live on
High returns sound tempting. Long-term profit projections make you dream quickly. But be careful: If you want to invest, only do it with money that you have “left over” anyway, i.e. that you don’t need for other purposes for the time being. If you lose the money in the medium or long term, it should not burden you financially. Therefore, you should not overstretch yourself and invest the money that is available to you. This is also extremely important to us at Wattify, which is why we ask you in detail about your investment experience before your first investment.
2. Now we do nothing at all!
If you win, you have to be able to lose. It is therefore all the more important to pursue a strategy that will bring you long-term profits over many market cycles. If you lose money, don’t despair, because it usually comes back. Therefore, one of the most proven investment strategies is the long-term buy-and-hold approach. For example, you can buy equity funds regularly and then hold them for decades.
The market evolves, so as an investor you will always face short-term challenges. The best thing to do is to sit out the small “crises” and stick to your strategy. Don’t sell in a panic at a low. By the way, this does not apply to Wattify investments, but we are probably only one of many building blocks.
3. Diversify your investments
You have found a suitable investment opportunity? That’s great, but still not enough! A broad diversification of investments serves to reduce risk. Therefore, it is important to spread your investments in a diversified portfolio. This way you build up several pillars and are not dependent on the success of one investment.
In addition to your investment in Wattify, you can also add pension funds or other investment opportunities such as real estate funds to your portfolio. Diversification creates security by covering different economic situations that may develop in different ways.
4. Understand what you are investing in!
Before you take the step of investing, you should study the product at your leisure. This will give you an additional overview of the possible risks. We advise against investments that you do not understand or that are strongly recommended to you.
If you decide to make an investment, think about why it makes sense and when you can expect to make a profit. It is your job to understand your investments. Therefore, you should know in advance the track record, costs and also the function of your product.
5. Things do not always go according to plan
Once you have a solid investment plan, don’t rest on it. It is advisable to check the market regularly — at least once a year — and make adjustments if necessary. It’s best to look over your portfolio whenever you review your accounts for tax purposes. And don’t forget your life. Things tend to change. If you are planning a new phase in your life, e.g. a move or starting a family, we recommend that you also review your investments.
Well-informed about your first investment with Wattify
It is important to Wattify that you are well informed about your investments and that you can assess your risks yourself. That’s why we provide you with as much information as possible on our website, in the app and on other communication channels. Our aim is that you can invest with a good feeling and in the best possible way. If you follow the rules, nothing will stand in the way of your first investment step — good luck!