ruk·si

💰️ Investing

Updated at 2016-11-06 15:24

I'm by no means expert in this field so take all in here with a grain of salt.

Learn about ETFs. ETFs (exchange-traded fund) are one of the safest way to invest, but have the lowest returns. They are investment funds traded on stock exchanges. These can help you divide your investments between investment funds, bonds, basket assets, raw materials etc. This is safe because different kinds of investments grow in different kinds of economical situations and different market areas grow and shrink separately.

  • Investment funs are good in a market boom.
  • Raw materials like gold are good in inflation.
  • Government loan bonds are good in deflation.
  • Cash reserve doesn't lose or gain value, safety net in all situations.

There are two different types of investment funds you can invest your money:

  • Active investment fund: Somebody is actively using your money to sell and buy stock for you and others. There will be more commission fees than in passive funds. Banks usually sell this kinds of funds.
  • Passive investment fund: All trade is based on indexes, top X companies is that specific sector e.g. HEX25:IND consists of the 25 most traded series on Helsinki Stock Exchange Main List. Stocks change less than in active funds.

Active investments are worse if you aren't a full-time investor yourself. In general, active investment funds are more unpredictable potentially giving higher returns, but you can also lose larger sums. Historically can be seen that almost all active investment funds lose to passive investment funds in the long run e.g. when making 20 year investments.

Don't buying stocks yourself if you are not making a living out of it. It makes little sense to gamble on our own money and waste time on it. Buy passive investment indexes and ETFs.

Passive investments are long term plan. When making passive investments, keep a mindset that you will not be getting any money out of it for the next 10+ years. Sell only stocks to buy more stocks, never get any money out of the system.

Example how one could divide his investments:
30% to Finland, 30% to USA, 30% to Asia, 10% to Europe

Saving accounts are only for saving. Saving accounts on banks don't gain you any significant amounts of money with their low interests. But then again, they are good place to for your buffer treasury. You should keep couple months salary saved so you won't even think about withdrawing your investments.

Investing is based on your work career. If you can save $500 each month for investments, you have a good pot of money after 25 years, usually more than doubling the value you would have had otherwise... if you remember to balance your investment portfolio at least once a year.

To balance your passive investment portfolio:

  • Check your investments 1-2 times year.
  • If something has gained 35% of its value, sell some to balance your portfolio.
  • IF something has lost 15% of its value, buy more to balance your portfolio.

Each country has it's owne investment channels. In Finland, most common services are Nordnet and Seligson. They notify your investments for taxes.

How to invest with properties:

  • Find properties that seem to have good value.
  • Send an offer for 50% of the price. You should be playing the waiting game so you'll get rejected a lot.
  • Include close about physical inspection.
  • Get a loan and buy it.
  • Use a property management service to manage the property.

Sources