Where is the position of this investment in my entire portfolio?
What volume of my capital is going to be allocated to a specific investment? Am I supposed to spend all of my life’s savings on an economic activity or investment? Or do I want to have a fun economic game (albeit in the hope of a profit) with 20% of my monthly savings?
It goes without saying that the more we allocate a portfolio to an investment, the less risky it is to accept it (albeit low risk and high risk, depending on the personality characteristics of individuals).
Do I know the space I want to invest in?
We do not all need to be experts in a field to invest in it. But it makes sense to try to be as aware as possible in that area. One of the worst forms of investing is when we are encouraged to invest in a field where we have no expertise, at the recommendation of a friend, colleague, relative or expert.
In the stock market discussion, we explained that we humans, in stressful times, generally cannot be rational, and our minds tend to make emotional decisions. Suppose the supplementary group has a unit for stock exchange investment advice. You trust the supplement today and invest in a few recommended shares with the recommended recommendations. As long as the situation is good, our friendship will be maintained. If the indicators fall a bit, you’ll still bear us. But suppose you see that within three months your capital has fallen by 3%. Here’s what the Supplemental Group tells you that “the stock market index has now fallen below 3% and your portfolio is still in the right position and it is wise to wait at least two weeks for the available news and information. And then we decide to sell stocks, “you are unlikely to listen to these arguments. Most likely you will regret working with the Complementary Investment Group and decide to sell!
That is why it is good to familiarize yourself with the basic concepts. Know the indicators. See and evaluate their highs and lows. Learn basic concepts such as EPS and DPS, modifying and reporting sums, and raising funds, etc., to form both a common language and your conversations to be “receiving information” rather than “dictating decision”.
There are other examples of investing in unknown areas that lead to serious failure. A friend of ours who worked for many years in a large industrial factory decided to invest heavily in a software company. He had heard that the profits were very good in the mobile applications area, and the young company working in the field was excited to welcome his big investment offer.
But small cultural differences triggered tensions. The investor, who had set up an office for himself in the company building and visited the company every day, strongly believed that the attendance clock should be installed next to the front door and each quarter delay equal to one hour of leave. . He believed that his heavy investment gave him the right to take care of the health of the company, and he couldn’t justify that programmers sometimes work until close in the morning and then want to sleep and not go to work!
Individual and organizational examples of investment in unrelated areas are not lacking. You probably have more examples of this in mind.
What is my time horizon in this investment?
We talked about systematic thinking about the time horizon. There we explained that anyone who spoke of any solution and any suggestion should immediately ask: At what time horizon? We discussed the same in another lesson in technical analysis. Do I want to make a profit every month? Am I willing to give up my money and interest for up to a year? Am I investing today to make a living for myself or my children for another ten years? Surely answering this question can completely change the priority of investment options.
How much am I willing to take the risk?
The first general rule in the discussion of capital and investment is that higher profits are associated with higher risk. If the profit of an investment is to me less than the profit of a long-term deposit in the bank, it is not reasonable to accept both the investment risk and the part of simple and easy profit.
On the other hand, if one believes that there is a chance that the profits are high and there is no risk involved, I should hesitate to suggest him. No one offers such an opportunity to others!
In other words, when asked how much profit can be made in this market, the question immediately arises: how much do you want to take the risk? This is not just about finance and investment. His examples can be seen in all walks of life.
If we are willing to accept the risk of execution and death, the best way to make money is to start drug trafficking today!
What does the past state of that investment indicate?
It’s always good to have a look at the past.
A look at the lives of currency players in the country shows that in the past decades, some of the most economic benefits for these people have been achieved. But we have also seen corruption in this area. We’ve also seen strokes, loses, and burned money. We have also seen crimes and prisons.
A look at the housing market reveals other facts. This market has been plagued by periodic ups and downs, probably due to market structure
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