What is investment?

It is important to remember the following: when investing, we always expect that the value of the acquired asset will increase and, accordingly, our investments (this can be time, money and even effort) will not only pay off, but also generate income. 

The main goal of investing is to put your money to work and generate income, instead of just holding cash.

Investments for beginners: why should you start investing?

People invest for a variety of reasons: to increase their wealth in the long term, pay for a child's education, accumulate capital for their own business, achieve some financial goals, or simply increase their income.

Instead of keeping money under your mattress or in bank deposits, we recommend considering the main reasons to take advantage of investment opportunities:

➠ Higher yield compared to almost zero interest rates on bank deposits 

➠ Protection against inflation (for example, during an economic recession, many investors invest in gold, the so-called safe haven asset)

➠ Opportunities to increase capital and achieve financial goals 

➠ Creation of a passive income stream through the accrual of dividends 

➠ Opportunity to diversify your investment portfolio

➠ Very high liquidity of assets (you can buy and sell assets in seconds) 

➠ Thanks to high liquidity, investment costs ( spreads and commissions) become low. 

➠ Low initial investment (the minimum deposit for the Invest.MT5 account from Admirals is only 1 euro) 

Of course, there are many more reasons to invest, since each future investor has his own goals.

ETF (exchange traded fund) 

Like stocks, Commodities ETFs can be bought and held with the goal of selling them for a profit. Some exchange-traded funds also pay dividends derived from dividends on the stocks included in the ETF. 

Here are some popular exchange-traded funds: 

• Vanguard S&P 500 UCITS ETF - Best US Stock Market Index Fund


• SPDR MSCI Europe UCITS ETF - the best European stock index fund


• iShares MSCI China ETF - Best China Growth Index Fund


• ETF on xTrackers MSCI Emerging Markets Index – Best Emerging Markets Index Fund


• iShares Select Dividend ETF - Best High Dividend US Stock Index Fund 

Unlike investing in stocks, when investing in the Forex market, you can profit from both the rise and fall of an asset: you can go long if you think the price will rise, or go short if you think the price will rise. the pair will become cheaper. 

Among the most liquid currency pairs on the market are:

• EURUSD


• GBPUSD


• USDJPY

To decide which currency pairs are right for you, we recommend reading our article: 

By the way, if you want to continue your education in financial markets, learn the basics of trading, technical and fundamental analysis, and also learn a lot of other useful information, take our Zero to Hero training course, available completely free of charge.

Investing for dummies: common mistakes and how to avoid them

1. Investing for the short term

One of the biggest differences between trading and investing is the time frame. Typically, traders are looking to make short-term profits - sometimes in just one minute (for example, with a scalping strategy)! This means they either need to actively monitor the markets and trade, or they need some kind of automated trading software that can do it for them.

On the other hand, investors must invest in an asset with the goal of making a profit by increasing its value over a period of years or decades. This helps relieve stress - you don't have to worry about short-term market declines because you know they will recover over time.

2. One-time investment

After making an initial investment amount, it is important to regularly increase the amount of funds invested over time. While the power of compound interest will make your initial deposit grow, it will grow much faster if you add to it regularly—even if you invest small amounts of $50 or $100 a month into your portfolio.

It will also help you make the most of market ups and downs. 

• When the market rises, you can continue to stay on top of the wave by buying more assets. 


• When the market falls, you essentially have the opportunity to buy these assets at a discount while prices are lower. 


• When the market rises again, your capital will increase exponentially.

3. Ignoring risk management

Whether you're investing in stocks, considering Forex trading, or wondering how to invest in a Bitcoin CFD or ETF, the need for proper risk management to keep losses to a minimum  cannot be overemphasized.

Here are some ways to manage risk when investing or trading:

• Follow the trend. It is often said that trend is your friend. So, one of the main risk management techniques that traders should consider is to buy assets that are in an uptrend and then sell them when they have risen too much (crossed a support level).


• Be consistent: It is best to invest a certain amount of money on a regular basis. This can help you achieve greater profits over time.


• Be patient: avoid withdrawing assets at the slightest drop. Price fluctuations in the markets are inevitable, and you may have to wait and give enough time for your strategy to work. Avoid selling during panic markets at all costs.


• Use Stop Loss: This is one of the most important risk management techniques in trading. A stop loss order will automatically close your position (i.e. sell the asset) if the price falls below a certain level.

4. Investing in one asset

The basis of investment risk management is portfolio diversification.

This involves purchasing different types of assets, asset classes and instruments. For example, investing only in stocks is quite risky because it means that when the stock market falls, you could potentially lose everything. If you have invested money in a variety of investments - stocks, commodities, bonds, Forex - then you will be protected from volatility if it grows in one of the markets. You can also include higher and lower risk assets (such as stocks and bonds) to diversify your portfolio.

This is probably the simplest way to manage risk because it reduces excessive risk exposure to one asset or asset class and protects the overall value of your portfolio. This method also helps identify assets or asset classes that are inversely correlated (for example, two currency pairs or stocks and commodities).

5. Inappropriate investment risk to reward ratio

Typically, the assets that provide the highest returns are also the riskiest. Therefore, it is important to balance your risk to reward ratio depending on your financial goals and investment time frame.

As we discussed earlier, investors with a long-term investment horizon (such as 35-year-old investors investing with retirement in mind) may be able to take on more risk in the short term simply because any peaks and troughs in the market level out over time. They may ignore a bad year or a bad month and focus on trends over decades.

In contrast, those investing for a shorter time frame, such as trying to save up to buy a property within the next five years, may not be able to take the same risk. With this in mind, they are better off choosing markets that may not have as high a return on investment but are more stable over a shorter period of time.

6. Irregular monitoring of your investments

While one of the goals of long-term investing is to be able to invest your money and let it grow over time with minimal management, it is still important to keep track of it.

Sometimes there are significant changes in certain markets that can cause large price fluctuations, such as changes in legislation, natural disasters and more. When such events occur, it is sometimes useful to modify the investment risk. Tracking your investments helps ensure you're moving in the direction you want.

7. Making decisions based on emotions

Finally, make investment decisions based on logic rather than emotions. Sometimes markets are volatile. Sometimes there are new, exciting trends that everyone wants to invest their money in.

Most often, trends pass and short-term volatility decreases. With that in mind, don't be tempted to buy or sell just because everyone else is doing it. When you make investment decisions, they should be based on reliable data and consistent with your investment strategy and goals.

The best way to put all of these tips into practice is to start investing. But if you are a beginner and not ready to start investing your money in the real markets, one way to get started is with a free demo account.