I have been investing for over 7 years, and I invested in Options, Cryptocurrency, Forex, stocks, day trade, swing trade etc...
I basically made any possible investment online in the stock market, I lost money, and made money, and finally, I found a way to low the risk and get a good yearly return. In this article, I will give you some of my experience and tips I wished I had when I started my investment journey.
First a little bit about my self, I did so many jobs that sometimes I even struggle to remember where did I start and what I have done. My first job was in resorts as an entertainer, after two years I opened a bar in my hometown, after 1 year I sold it and started an export agency car with one of my friends for 4 years.
When the economic crisis started to hit the country, I had to leave and emigrate in UK where I start working as a bartender and waiters. I later moved to the hotel industry where I start a new career from the receptionist to supervisor and in final as Duty Manager in Hilton. My career in hospitality ended at Jumeria group as HOD Head of the department.
During this time, I was always investing every day every week every month. I love it and loved the challenge to understand this world of investment all these charts, the financial news and how this influenced our world. I spent hours looking at charts and start seeing some pattern on how investor think and feel about a particular stock or currency.
By gaining experience, you stop losing money, and you start to achieve the break-even point and slowly see some profit increasing over time. It’s more or less like when you have your own business, you need to invest money, and you don't call this a loss, but an investment. Until you reach, after 1 year or sometimes 2 years, the break-even point and start to see some profit, the same happens in the stock market, you need to invest some money but on your knowledge, and this will build up in time until you start to see some good Return On Investment (ROI).
Why you need to start investing now
let’s start to talk about how and when to start to invest.
The “when” it’s easy, as soon as you can. If you have some cash sitting in the bank and you are afraid to invest and lose them, I have bad news for you, because YOU ARE ALREADY LOSING MONEY. Every year your money lose around 2% in value, and this happens for something called inflation.
You may be wondering ok 2% is not that much, ok so let’s put it in this way. If you have $1000 and you are losing 2% yearly in 20 years this money worth $673. On the other hand, if you are just able to match the annual 2%, this money would worth $1484. Well, now multiply this for whatever money you have in the bank this can be 5, 10, 15, 20, 30, 40, 50 or 100 thousand, does it still sound like not much money?.
Investing is easy but not simple, you need to follow the rules, and just a few people can stick to the rules. You need to think long term, but people are impatient, you need to use the money you don't need, and people use the money they cannot hold for long term or afford to lose.
Let’s start with the money management strategy
- Start by investing between 25% and 35% of your money, NOT 100%.
- In each stock, you buy invest the same amount, 2–3%.
- Keep 10–20% of the money invested in cash to buy in deep (I will explain this later).
- Hold at least 10–15 different assets/stocks.
- Diversify your investment (technology, finance, health, insurance etc..)
Simple rules, right? Well people, including me, struggle to follow them at the beginning until they realise the only way to gain profit over time.
Where to invest?
This is something that really depends on your style, but I can give my experience and stocks and index funds are the best investment you can do for long term investment. People think that is easy as a day trader to make money but if you think long term and you invest in a growing company and wait you may even double the profit that a day trader does and with less effort. But if you have a lot of time to invest in learning and looking at the chart, you can try with the forex and the day trade, but in my opinion, is too much effort, too risky and too stressful.
NEVER USE LEVERAGE, if you don't know what is leverage check here. This is where brokers want to bring you and push you to use leverage so you can expose your portfolio to high risk with the promise to have a high return, does it worth??, absolutely no. I know so many people burning their entire portfolio by using leverage. You cannot time the market, and if you think you can, you are a fool.
Overview of the strategy
So let’s talk about how did I manage to have low risk and high return.
- First of all, half of my capital is invested in an index fund. My favourite one is the FTSE100. But any of the most important indexes are a good choice, S&P500 also another good one. Having something like the FTSE index gives you the chance to invest in the best 100 companies in the UK or USA or any other country you would prefer. Plus you earn dividends every year.
- Invest in growing companies, Google, Amazon, Netflix, Apple etc.… These are just a few but you need also to look for companies that everyone talks about, which aim to can change the way we live. If a company has a unique business model and can change society, business, culture etc. is the right stock to buy
- I usually read a lot and monitor investors’ websites which are not free, unfortunately, but many are free and you can use them, but If you want the best websites that can give you a good overview of a company etc you have to spend money. I prefer to pay because sometimes in a few days I can recover the money I pay for 5 years subscription if I can read properly the info given.
- Hold at least 10–15 stocks in your portfolio.
- Don’t panic when the market goes down 10–20% if you did your research and company is solid it will come back 100%.
- Buy deep, means that if your stocks go down, don’t freak out, the market is just giving you a chance to buy your favourite stock a lower price if you can catch the opportunity buy more and hold.
Visualize the concept
Let say we have a portfolio of $100, we decided in advance the money management, and important is to stick to the plan, if you sai to invest a certain amount stick to that amount don't put everything in one go.
We want to invest 50%, and 50% keep it in case the market fall to buy in deep.
After one month we have the following situation, 3 stock are up a total of 60%, and 2 are down 50%. We are still in gain, and this is because we have good money management. If one of the stock had a higher % to another, we could risk to have that stock down and compromise the entire portfolio.
This strategy is good. If one of your stock is up you can sell it if you aim to a particular % like 10%. However, I suggest always to hold for a long time. If a company is performing well can do even 100% Its initial value, this is why I always hold a stock for at least 1 to 3 years.
Another good reason to keep some cash on the side, imagine that the two stock down is Apple and Amazon. We all know that these companies are solid and are not going out of business anywhere soon. Well, this is a good time to buy these amazing stocks at a lower price and just wait for the market run-up again to double your profit.
Now we double on our losing stocks, I usually do that when I have a solid stock that went down, and I am sure it will recover, and as I said the first rule is to invest in good stocks.
Let say we double our investments on the losing stocks, and one month later this happens. The stocks that up went down and the one down went up. But we are still in Green because we used a good strategy, good companies, and not penny stock or IPO, and we stuck to the plan.
I saw many people losing money because they buy and once it goes red they sell, and later that stock recover and go even further. Another reason to lose money is to believe in rumours and put all your money or a big chunk of your money in 1 stock, and this stock does not perform as it should too and even having all the other stock in green you have your portfolio down, I call this bad money management.
And remember not just becue you lost an opportunity does not mean that next week or next month you won’t have the similar or even better opportunity. So wait, think long term, relax and enjoy the ride. Investment is fun and profitable, don’t turn this into a race and stressful environment for you
Learn how to invest in the right companies without effort
You may be wondering, well, I don’t want to do research or west time reading and look at charts every day etc. Well you don’t have to I am happy to share all my stocks in real-time with you, and if you don’t want even to open your account to trade, e-toro offer a good way to copy other investors.
You can deposit your money wait and earn passive income by leaving the hard work to other traders like me, this is called copy trade and many people are earning good profit by doing basically nothing just investing in other people portfolio which can be mine or someone else.
If you want to follow me and check my portfolio below the affiliate links if you use it to deposit and register you can copy me, and I will give you full access to my strategy and signals
I hope you enjoyed this overview on investment, and if you want to learn more get in touch.