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  • FinMarie’s 5 Rules Of Investment For Asset Building

    5 Rules Of Investment For Asset Building

    When it comes to saving and investing for women, there are a couple of rules to respect. This set of rules can help you to save your way towards your investment goal in a disciplined manner. Of course, there are further, specific rules of investment depending on your investment type that define and detail your approach. But the basic asset building tips are the same for all investment types and goals.

    In our overview, we’ll introduce you to the 5 most important rules of investment. If you know and follow these steps, you can learn from scratch how to properly save money. This way, you can avoid classic beginners’ mistakes and invest your money more successfully.

    1st Rule: Set Savings Targets

    If you want to save and gainfully invest money, you cannot afford to daydream. Quite the contrary, really. Setting tangible saving targets is an absolute must!

    What does this mean? Start setting goals that are not too long in the future, but can be realized as soon as possible. With realistic, available, and predictable milestones in view, many people perceive saving a much easier task.

    Once these goals are reached, you’ll experience a sense of achievement — and this feeling, this lift, of having passed that self-defined finish line, will encourage and motivate you to tackle new, further, larger, and longer-termed saving targets.

    2nd Rule: Compile An Action Plan And Repay Liabilities

    When you know your saving targets, set up a strategy on how to reach them. Our investment rules propose you get a clear idea on which liabilities you’re currently repaying. Especially, if they are smaller liabilities — for instance smaller loans or predictable durations —, it makes sense to redeem these first, before you address investing your savings or servicing savings plans with a certain monthly amount.

    It’s important for our asset building tips to work that liabilities are considered in your personal action plan. Answer yourself the following questions to gain a rough overview. Write the answers down in order for them to stay visible and present.

    FinMarie’s Investing For Women Self-Survey

    • What’s my financial starting position? Don’t leave out anything, no deferred payment, no loan repayment, no fixed costs. One of the most important rules of investment is to be honest with yourself.
    • How’s my monthly debit and credit situation? This is not only about fixed income or costs, such as liabilities and utilities, but also about ordinary expenses like groceries. How much do you have left in the basket by the end of the month?
    • How much do I want to save every month? Check how much you have left every month and how far this is in accord with the amount you’d wish to invest monthly. We do not recommend you invest everything that’s left, in order to remain liquid in emergency situations.
    • Can I raise my monthly savings rate after a certain period of time? Often, investing for women is easier, if they start off with a smaller sum and maybe raise it at a later time.
    • How and wherein do I want to invest my savings? Gather information on the various types of investment that suit your saving target and make up your mind on for how long you can spare which amount of money.
    • Will there be predictable mid- and long-term changes in my private and financial situation? How can I react to them? Answering this question, will help you, too, to sound the investment type out that suits you best. Focus especially on family planning or if you consider a different job or change of residence.

     

    Get advice from our financial experts here at FinMarie: a first assessment is free.

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    Useful Urgent Measures:

    1. Transfer a monthly fixed amount to a second bank account, maybe a money market account, which can contemporarily serve as a deposit.
    2. The savings amount should correspond with your financial possibilities. First, start with a smaller rate of between 30.- € and 100.- €.
    3. Pay your monthly rate by standing order. This way, you cannot be tempted to skip payments or spend the money on (unnecessary) goods.

     

    Remember: In order to best manage the total alignment of your assets or rather your asset building, you should always confront all your liabilities with your personal risk tolerance and take the combination of both into account.

    3rd Rule: Choose Your Investment Type

    There are various ways to invest your savings in the financial market. But, which ensures the best returns?

    Financial experts, results of scientific studies, and the experiences of many investors show that yields in great part (up to 80%) depend on a strategic alignment. Packages that include all various asset classes, i.e. stocks, ETFs, real estates, and bonds, have proven to be particularly successful.

    If you invested in a small selection of separate stocks only, even the best timing in buying and selling would influence your returns only to a degree of 10 to 20 percent.

    This shows the significance of a strategic alignment for your asset’s value development. Hence, a detailed review and consideration of your total wealth’s strategic alignment is worth the while. For your financial future, you should also develop a long-term asset strategy that takes your personal risk preferences, liquidity and yields’ aspects into consideration.

    Here’s another of FinMarie’s asset building tips: Upcoming investments or changes in your asset structure, such as life insurances or buying a home, should still allow for you to maintain your asset’s set strategic alignment.

    4th Rule: Go Slowly, Go Safely

    A very simple stock exchange rule says: “Buy, when the price is low, sell, when it’s high.”

    But this is easier said than done. After all, none of us are clairvoyants (which is too bad) and can predict tomorrow’s rates. Rather, we’re prone to rush and insecurity, which lead to emotional investment mistakes. Investors sell when prices are decreasing, and buy when they are increasing — lead by fear of missing out.

    This is way FinMarie established this fourth of their rules of investment: Don’t let scaremongering get the best of you. Don’t make financial decisions based on panic.

    Properly check when it’s time to buy and when it’s time to sell, and sit fluctuations out. Only, if you invest long-term, you will benefit long-term. When times get hectic, remember your long-term investment targets and asset strategy to rationalize emotional investment decisions.

    5th Rule: Find The Right Expert

    Little time? Little experience? No need to shy away from investing. Experts can help. Especially, during the first period, it’s very handy to have someone by your side who supports your financial planning and makes you aware of the right decisions. Someone who’ll help you to reconcile your goals and your finances in order for you to achieve ideal results.

    Here at FinMarie, experts who do not only know the financial markets, but also the life reality of women very well are available for you. Book an assessment with us for realistic advice on investing for women:

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