Why is investment necessary?
Conclusion: It is difficult to grow money by just depositing money.
Reason:
- Low interest rates and almost no interest
- Inflation reduces the value of money
Example:
- Price increase of 2% per year → Assets will actually decrease
Summary: The role of investment is not to "increase" but to "increase while protecting".
Step 1: Decide the purpose and period
Conclusion: Investing without a purpose is likely to fail.
Points:
- For what? (Retirement/Education/Surplus funds)
- When should you use it? (3 years, 10 years, 20 years)
Mini example:
| purpose | period | suitable investment |
|---|---|---|
| travel | 1-3 years | Low risk (cash/bonds) |
| old age | over 10 years | Stocks/Investment Trusts |
Summary: ``When to use it'' determines how you take risks.
Step 2: Select the product (this is important for beginners)
Bottom line: Choose simple products first.
Typical example:
● Investment trusts (for beginners)
- One word: Products managed by professionals.
- Features:
- Small amount OK
- Automatically distributed
- less effort
● ETF
- In short: investment trusts that can be bought and sold like stocks
- Features:
- low fees
- Real-time trading possible
● Stocks
- One word: Direct investment in companies
- Features:
- return big
- Price fluctuations are also large
Summary: At first, diversified investment is the basics with investment trusts or ETFs.
Step 3: Start small and continue
Conclusion: Continuity is more important than timing.
Reason:
- Market prediction is difficult
- averaged over the long term
The important thing here is "compound interest":
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One word explanation: → How profits generate profits
Specific example:
- Operates at 5% annual interest rate
- Assets increase faster over time
Summary: The essence of investing is that the earlier you start, the better it is.
Mistakes that beginners often make
- Aim for the timing with a lump-sum investment
- Seeking profit in the short term
- Taking information from SNS at face value
Measures:
- Monthly savings (dollar cost averaging method)
- Think long-term
- Distribute the products
Summary
- Start investing with “purpose → product → continuation”
- For beginners, diversification is the basics with investment trusts.
- Long term x compound interest is the most reproducible
=> Action steps:
- Decide on the purpose and period
- Set up a small amount of savings
- leave it alone and continue