How to start investing

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Wonder how to start investing and where to invest in? In this article, I'll tell you how to diversify your portfolio to achieve high returns while maintaining the risk. Many brokers allow you to begin investing for the cost of a single share or even a portion of it. Some firms also provide paper trading/test accounts, which allow you to practice buying and selling various assets such as stocks, cryptos, indexes, commodities, or ETFs using stock market simulators. There is no one-size-fits-all solution for investing your money, so this guide will help you with defining your investment strategy. This guide will assist you in getting started with the appropriate tools and tactics. For someone who is just getting started, investing might seem overwhelming, but to start investing, you simply need to download an app and start practicing.
There is no one-size-fits-all solution for investing your money, so this guide will help you with defining your investment strategy. This guide will assist you in getting started with the appropriate tools and tactics. For someone who is just getting started, investing might seem overwhelming, but to start investing, you simply need to download an app and start practicing. Here is a table I created to diversify my investments into several different categories.

First of all, you have to learn about the available options (read assets) to invest in. Ideally, you will need to create a table and document all your investments. Companies call these balance sheets. But will get there, for now let me just tell you how to diversify your investments Below, I will describe the meaning of each of the columns.

Location

While this may sound obvious, at first we should separate all our offline investments, such as house, car, mobile phone, etc, from online ones, such as investments in stocks or crypto. Do we count the new GoPro as an offline investment or not? For simplicity, you can start with something big, like a house and a car, if you have one. Later, you may add to the list already mentioned, an iPhone or GoPro.
Someone may argue or suggest that you use only items that generate you money, so a house where you are living is not an investment, but if you have another one for rent, it is. I would suggest counting everything that costs more than some critical sum to you. For someone it can be $100, for another person it is $1000, but you have got the idea. Also, if you go to a local bank and put some money on a deposit to earn interest, it counts as an offline investment.
To round out the list of online investments, here are the company shares or stocks, ETFs, indexes, crypto, and anything else that you can buy or sell from your phone in a single day. If some of these words are not familiar to you, no worries. I will tell you about them later on.

Market

There are 7 main markets available to you to invest in:
  • Stocks
  • ETFs
  • Indexes
  • Commodities
  • Forex
  • Crypto
  • Real Estate
where first three are more/less the same as both indexes and ETFs are “collections” of stocks based on some criteria. The most well-known SP500 index, for example, is a collection of the 500 largest US companies, with investments made in each of these companies based on the respective company`s market capitalization. Apple is a good example, as it is one of the biggest companies in the world, and the SP500 price goes the same way as Apple`s stock price as the index consists of about 10% of it, making a strong corellation of price moves between the index and Apple stock. ETFs (Exchange Traded Funds) allow you to invest in.

Region

The world is usually divided into 3 regions - America, Europe, and Asia, respectively. When buying shares on the New York exchange, these investments should be attributed to the Americas. Likewise, with buying an apartment in Spain for rental or buying Adidas stocks, it will go to the European Region.

Country

Separation by region is a good starting point, but later diversify even more by controlling your investments in different countries in the same region, say the same percentage in Germany and France.

Exchange

If we go even further, some countries have several exchanges, like NASDAQ and NYSE in the USA, so you might want to keep your money on each exchange to be on the safe side.

Sector

When investing in stocks, you should buy stocks from different sectors for the same reason. In the event of a drawdown in one sector, others tend to go up.

Industry

Each sector is divided into several industries and, as a rule, diversification by industry is even more a confusing process that allows you to even less reduce the risks of drawdown of your portfolio.

Bank/Exchange/Broker

Even having split all investments into different regions, countries, and markets, it would be foolish to keep all the money in one bank. Therefore, it is advisable to divide them among several.

Commodities

are real goods and can be divided into several sub-categories:
  • Soft (commodities are goods that are grown):
    • Sugar
    • Cocoa
    • Wheat
    • Soy
    • Corn
    • Rice
    • Cotton
  • Hard commodities are mined:
    • Gold
    • Silver
    • Aluminium
    • Platinum
    • Nickel
    • Zinc
    • Helium
  • Energy:
    • Gas
    • Oil
    • Coal

Cryptocurrencies

When investing in cryptocurrencies, it is worth deciding which of the options is most suitable for you based on the timing, risks and the need for manual intervention.