What Should Be Considered When Investing?

Things to consider when investing the most important issue to pay attention to before the subject what is an investment? Is a question. Individuals around the world want to live a comfortable life by achieving high earnings in the future by ensuring that the cash flow in their accounts is used more efficiently. At this point, it makes different investments in order to make the cash flow it holds more efficient. For this reason, understanding the question of what is an investment before investing is the most important issue of getting high profits with the right investment.

What is an Investment?

Investment, it is called an activity carried out in order to increase the value of existing resources after a certain period of time or to provide a return. In general, an investment is a case of investing money in an asset or financial instrument and entering into the expectation that this investment will receive a return over a certain period of time.
The main objectives of the investment they are:

Getting A Return: By investing, it is first aimed to increase the invested money or provide a return. This, shares, bonds, commodities, real estate it is realized through investments in different asset classes such as.
Protecting the Asset Value: Some investments aim to increase the value of capital by offsetting the effects of inflation or protecting the asset value.
Preparing for the Future: Investment is also used for the purpose of accumulating and creating capital to meet future needs or achieve a specific goal. To illustrate, if, pension funds or investments made for children’s educational expenses are included in this category.

There are different types of investment, and they are usually preferred according to people, determined according to personal financial goals, risk tolerance and liquidity needs. Shares, bonds, commodities, real estate, mutual funds various investment instruments such as exchange-traded funds (ETFs), futures and options are included in this group.

Each investment has its own risk and return profile, and investors must carefully evaluate these factors before investing and choose the method that is most suitable for them. In addition, it will always be a healthier investment forecast to consider market conditions, financial goals and time frames before investing.

What Should Be Considered When Investing?

Things to be considered when investing there are some important points. Acting according to these points or strategies may be the most important factor in obtaining the correct and high profit of the invested amount. Although there are different mutual funds or different issues around the world, the only common point is the issues that allow you to make a profit if applied correctly;

Setting Goals and Strategy: Set a clear goal before investing and act accordingly by creating a strategy to achieve this goal. Are you going to invest short-term or long-term? What is your risk tolerance? Answering such questions is one of the most important criteria for the right investment.
Assessing the Risks: Always assess the risks when investing. Every investment has a certain level of risk. It is extremely important to understand and accept these risks before investing. In this way, you can also find different investment alternatives by taking into account the risks.
Diversification: Take care to distribute the risks by diversifying your investment portfolio. Into different asset classes (stocks, bonds, commodities etc.) and make your portfolio stronger by investing in different industries.
Basic and Technical Analysis: Make an analysis about choosing the right side by evaluating the assets you will invest in with basic and technical analysis. Fundamental analysis provides information about the financial situation and future of an asset, while technical analysis helps to predict future price movements by examining past performance.
Long-Term Perspective: Take care to invest with a long-term perspective. Short-term fluctuations can cause you to move away from your goals. Be patient and act without haste by giving time to your investments.
Assessment of Your Financial Situation: It is the most important issue to carefully evaluate your financial situation before investing. Make sure that you have an adequate emergency fund for emergencies and act accordingly by determining the amount that you are ready to invest.
Taxes and Fees: Act with tax and transaction fees in mind when investing. These fees can affect your return on investment, so take the right steps by trying to minimize expenses.
Stay Up to Date: Take care to constantly monitor financial markets and investment instruments. Market conditions and asset prices are constantly changing, so be careful to always be open to information and current developments.

Being careful and conscious when investing helps you achieve your long-term financial goals. In general, the most common mistakes that individuals make in this regard are to act in a hurry after investing at the beginning. Especially in mutual funds, due to the decrease in the value of a share, investors consider selling their shares. THIS is one of the biggest mistakes made. The most important thing to remember is that even if the stock loses value at this point, let’s wait patiently by using the amount of cash you have correctly.

What is the Risk?

Risk, is called the probability that the expected outcome of a particular event or situation will change unpredictably or undesirably. In financial terms, risk is usually defined as uncertainty or variability in the value of invested assets.

Financial risk, refers to the probability of possible losses or fluctuations in the prices, returns or values of the invested assets. There are some types of risks that can be encountered when investing in financial markets. Accordingly, if these risks are:

Market Risk: It is a condition that occurs due to fluctuations in the prices of general market conditions or an asset class. The stock market, the bond market, commodity market there are market risks in different markets such as.
Interest Rate Risk: It is a condition associated with the change of interest rates. Especially because it is an important issue for bond investments, bond prices fall when interest rates rise, and vice versa, bond prices rise.
Credit Risk: The risk that a company or government that owes money will not be able to pay back its debt. It is among the most important issues, especially in fixed income securities such as bonds.
Liquidity Risk: It is related to the ability of an asset to be quickly converted into cash and sold. Illiquid assets may be exposed to liquidity risk in cases where they are difficult to sell.
Operational Risk: These are situations caused by factors such as errors, violations, or system failures that may occur during the execution of an investment transaction or the operations of an investment organization.
Political and Geopolitical Risk: It refers to the risks that arise due to factors such as political instability, tensions between countries, and terrorist acts.

These types of risks are among the important factors that investors should consider when evaluating investment decisions. Investors can minimize risks by carefully managing the balance between risk and return, diversifying their investment portfolios or using other risk management strategies.

Nurullah E.