Investing For Beginners: A Quick Introduction

We all know that investing your money is important. Likewise, we’ve all heard that you need to ‘make your money work for you’. However, I’m sure that there are many people out there who are a little bit confused as to where to start. Well don’t worry, the world of finance is definitely a tricky one, and one that takes a skilled and knowledgeable individual to navigate. But don’t let that put you off. There are plenty of ways that people armed with just a rudimentary knowledge of investing can secure great returns on their investments. First off, let's explain what exactly it means to invest. Generally speaking, an investment is when you put capital (money) into a financial endeavor (for example a property deal), with the intent of making a return (making more money thank you put in).

Fundamental analysis or technical analysis

Broadly speaking, there are two methods to analyse the potential returns to be made on a financial asset. You can use fundamental analysis to technical analysis. Fundamental analysis takes macroeconomic factors, industry-specific factors, and firm-level matters into account when devising expectations for the future movement of an assets price. Technical analysis generally uses methods that focus on the historical price action of an asset in various timeframes. Technical traders often look for a confluence of indicators to predict future movement in price. These two methods are not mutually exclusive and traders will often consider a mixture of fundamentals and technical data when analysing the future movement of the value of an asset. In the last decade, financial investments have become more accessible, mostly due to the introduction of digital investment. This has facilitated a new breed of successful amateur and/or part-time trader who can use professional level applications and indicators, and get great results, whilst choosing and managing their own risk aptitude.

Stay in your lane

To ‘stay in your own lane’ might seem like harsh advice and a put-down. But in reality, it is a very smart tactic. For example, if you have sent the last 10 years of your life working in the real estate industry, then it’s almost certainly a better idea for you to invest in property as opposed to trading financial assets and derivatives. Furthermore, if your an expert in something like technology, then stick to investing in firms where you can use your expert specific knowledge as a competitive advantage. This may seem like really basic advice, but it’s fundamental to success. You can expect to achieve a successful return in something unless you have an edge. For high-level financiers, their ‘edge’ might their ability to skillfully read charts and employ the use of techniques such as candlestick analysis to predict future movements in asset prices.