Now that you have completed our online course on investing basics, let’s do a quick review of what you’ve learned.
Let’s review…
There are many reasons to start investing. You may have a specific financial goal in mind, such as building a retirement plan, college fund or nest egg. Most importantly, the earlier you start working towards your goals, the more time you will have and the less pressured you will feel — which can lead to better decision-making.
Investing terms to remember
We’ve also covered a variety of investing terms you will need, including:
- Volatility: the rate at which an asset increases or decreases in value over a period of time
- IPO: short for Initial Public Offering, where a private company turns public by selling its shares on a stock exchange, making them available to the general public
- Dividends: the distribution of a company’s profit in the form of payment made by the company to its shareholders.
- Long (buy) position: owning an asset because you believe that its price will appreciate in value in the future.
The different types of assets
You can choose to invest in a variety of instruments belonging to the different asset classes. They are:
Shares of ownership in a public company
Decentralized digital assets created for online use
Short for exchange-traded funds, which are baskets of instruments usually grouped by sector or industry
Trading or investing?
You have also learned the difference between short- and long-term investing. Investing can be further categorized as passive or active, but both typically have a longer term outlook and hold your assets for long periods. Short-term investing, however, is about creating results in shorter time frames.
Get a handle on emotions
We’ve discussed the importance of psychology on investing, and how to be aware of some of the emotions you may encounter as an investor. Expect to have losses occasionally; beware of biases, and don’t let “FOMO” take charge of strategic decisions.
Don’t forget to manage risk
Risk management is a priority for every investor. Avoid concentration of assets by allocating capital to a variety of different assets, thus, spreading your risk. Recognize which assets are riskier than others to create and manage a less volatile portfolio. And make use of a stop-loss to limit the downside of investments that don’t go the way you hoped.
How you structure your portfolio will define its volatility and risk exposure. Remember that diversifying your assets with varying types, sectors, geographic exposure or other criteria will help to keep your risk score low.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments.
This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.