Wednesday May 25, 2022

Investing for the poor: You don’t need statistics for profits

Invest and go to wonder if you have deep in your pocket. There is no need for statistics to invest and there are enough products on the market that can be issued to me in exchange.

Many people end up thinking about investing because they put their pensions in the bank. According to them, investment is a luxury. However, this may not be true and even with a small amount you can invest appropriately.

If we invest thousands of crowns in the breath, we cannot expect the income that will make us god immediately. What is important is the time we reserve for investment and patience. It is also necessary to keep in mind that we do not have to invest all pensions in one investment tool. It is therefore important to diversify, which will look different for conservative investors who are afraid of risk, and for dynamic investors who prefer the return.

The funds are the basis
For those who do not have enough pensions or are not experienced investors, funds are the most suitable. Especially due to the simplicity, very good liquidity and diversification that a small investor can afford. The average risk-return ratio and the relatively low fees are also interesting.

The minimum amount needed to invest in the fund is currently low – one-time is 1000 and 5000 K, regularly (for example, monthly) even only one hundred and 500 crowns.

Funds are far from the only way. Investing in shares or derivative products directly on the stock exchange is not very suitable for small investors. Due to the high fee, this approach is interesting for investors with small amounts only if they adhere to the long investment horizon and will be able to five or similar times of uncertainty, as we have witnessed in recent weeks and months.

However hasty the reactions and the sale of the action in periods of decline, they can lead to the remaining losses, which can then overwhelm a real glade in a small portfolio. The day of short-term speculation also does not weigh in, because fixed fees for executed trades in small invested shares are much more pronounced than in larger volumes.

The dynamic component of the portfolio should therefore consist of equity funds or certificates. For dynamic investors, stocks can represent more than half of the portfolio, and even conservative investors should not avoid them completely.

Bonds are for caution
The conservative component can be formed by bond funds and money market funds, which invest in debt securities issued by the state, or by large, stable companies with a high rating. For prudent investors, bonds and the money market will of course make up the majority of the portfolio, but they will also find a place for dynamic investors.

Fund type potential input degree of risk
stocks, stock funds 10 – 15 % high
smen fondy dynamick 8 – 10 % stedn vysok
shift funds defensive 5 – 6 % stedn
bonds, bond funds 3 – 5 % stedn nzk
money market funds 2 – 3 % nzk

The bonds themselves are not usually intended for retail investors, as the minimum volumes are in the breath of one million crowns. Here, too, there are only funds that can buy bonds and also take care of reasonable diversification.

Risk risk and loan fund
One of the conservative components can also represent hedge funds, mainly to guarantee the return on investment. Their inputs are quite different with a large number of ways. The big inappropriate is the fixed due date and the fees in case of non-compliance.

Sloen portfolio with a dynamic investor

An alternative could be protection funds, which do not guarantee the return of the total (with the exception of Pioneer Hedge Fund 2, which guarantees 100% return in the third period), but their maximum loss is limited. The limit is at the level of 90% of the invested amount and over time it shifts either after reaching a certain return, or after each of the best historical returns. Because it is an actively managed product and a dynamic component in the form of an action can form a large portfolio, the ratio of return and risk is very interesting. In addition, it is an open-ended fund, which, unlike other hedge funds, guarantees good liquidity.

Cocktail smench pool
Funds that invest in different types of assets can be an interesting exchange, helping investors to solve the problem of diversification. Here, too, there are risky, dynamic funds with a strong share, but also conservative, defensive funds that invest firmly in bonds.

Sloen portfolio with a prudent investor

For those who cannot afford to invest a single amount of pensions and even the lowest required amount is a problem for them, it is advisable to invest regularly. In addition to the minimum amount needed, the investment of regular investments is also an average investment, which will be appreciated especially by conservative investors. Very good products that are worth investing in regularly are the so-called life cycle funds. (life cycle fund). Their biggest advantage is the automatic rebalancing and reallocation of the portfolio (regrouping and gradual change of the risk profile). These are relatively new products, their number and popularity of the bag is growing – more HERE

The crown is recommended
Therefore, if you decide, but your ability does not allow you to invest a large amount of income, you should take into account only investments in crowns. There is much more money in foreign currency, but the risk is particularly high for conservative investors. Strengthening the koruna, which is so popular with Czech tourists, devalues ​​any unsatisfactory investment. The final return for the Czech investor, even if, for example, in dollars his investment seemed interesting, I can be pathetic. Even from that small, which is available at home, the bag can be chosen. If you want to invest in foreign securities and at the same time without currency risk, the products pay off in the crown.

If you are not satisfied with the house only with me and if you are willing to take a new risk, foreigners’ investments should represent only a small percentage of the total investment you have made. In foreign currency, it is best to invest only in long-term investment products (stocks, certificates, ETFs), for which, due to their volatility, the effect of changes in the exchange rate is much less pronounced than for conservative products.

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