Basic Investing Tips 101 | Initial Capital & Channels

InvestingBasics Investing tips is a series we will be running over the next 12 months going in-depth into some of the key investment strategies we personally use and recommend to our clients, customers and even anyone looking to get interested in the stock market. Remember the key to success is 2 fold: 1.) Research – You have to research before you make any trades, this is a huge subject that also includes blocking off the bad sources, avoiding the irrelevant “experts” in a field and creating a unit size to suit your needs. 2.) Patience – Making too many trades is the quickest way to lose all of your capital, and is what most people actually end up doing. Investing is not gambling, if you want to gamble then go somewhere else, investments are for people with capital and brains!

Raising / Starting with High Initial Capital Levels

To begin investing you will need some capital. Now how you gain that capital is totally up to you, I wouldn’t recommend investing with a loan or other people’s money, especially if you are a newbie, but if you have some money tucked away in savings and you truly believe in yourself then I would highly recommend investing this. As a sidenote making 20% a year through investing if you are sensible is extremely easy. Making 50% is also quite easy but you have to be more active in the markets and usually the risk is a lot higher.

So the question you have to ask yourself is do you want to make 20% a year with a 1-5% risk factor, or do you want to make 50% per year with a 10-20% risk factor? You can obviously have both and this risk factor doesn’t mean you are going to have all of your investments tank at once, it just makes it easier for you to gauge your goals and aims through the year. Personally I use the 50% per year model as I am confident in my trades, and losing 10% of my bankroll on a few trades isn’t going to affect my lifestyle.

This decision does also depend on a.) What channel you are investing in (more on that in a second) and more importantly b.) How much capital you can actually introduce and deposit into an account. If you only have £10,000 to play with, then looking into forex is probably not a great idea. But if you have half a million, then forex might be your best option. I’m not here to tell you what you should be doing, just tell you the basics of trading!

Choose Your Channel(s)

There are a number of ways you can invest. There is forex, general stock trading, lower level stock trading (this is usually more risky), VC which stands for venture capitalists, who invest in businesses at their infantry and CFD trading which is similar to forex but can be done through almost any market. The key element in this case is to choose something that a.) Your budget allows you to go into and B.) You actually find interesting, for example there is a method that involves trading energies and its very profitable to a lot of people but for me I can’t think of anything more boring! So instead of even looking into that I thought I would be better served getting into forex trading and currencies as I find this a lot more interesting and also the business side of investing too, such as stocks and shares.

Select the Correct Technology

Finally I’ll make a quick note on the tech you should have. Now you don’t need a huge £2k laptop to start trading but I would recommend you get yourself a location you are comfortable working in, whether this be a home office, or just a cafe you could be in for 2 hours a day. Once you have this location you are going to need to ensure it has 1.) Fast internet – There is nothing worse than missing a trade by 10-30 mins because the internet went down or was slow. 2.) Drinks – Call me crazy but I like to stay hydrated and 3.) Comfort – It needs to be comfortable for you, I mean you want to be comfortable working as this is essentially what you are doing (Work.)

The technology itself, I would recommend just picking up a standard high quality high processor laptop, something with an I7 core processor by intel will do the trick. If you travel alot then also factor in weight, size and battery life, if you don’t then there isn’t much reason to do this!

Hope you enjoyed the post and 102 should be coming out soon!