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Investing has come a long way. At one time, there was a perception held by some of investing being an option only, for the rich and therefore inaccessible for the average person.
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Nowadays, the investment landscape is much more inclusive. With the modern advancements we enjoy, the mobile applications, online portfolios, and 24/7 access to global markets, it’s become a dynamic and immersive way to grow personal wealth. By simply demonstrating a willingness to learn and some clarity over your ambition for your money, you have the ability to get involved. The popularity of these platforms is clear to see, too. Crowd investing and crowdfunding have soared in their accessibility, with the crowd investing market alone forecasted to reach $7 billion in transaction value by 2022.
Getting Started
The key to a great portfolio isn’t size or frequency of buys and sells - it’s actually diversity. A diverse portfolio is far better equipped to deal with the natural fluctuations of markets over days, months, or years. However, knowing how to build a diverse portfolio isn’t immediately obvious, especially for a newcomer. If you’re starting your investment journey on a low budget, you might be looking for lower-risk investments or reliable stocks. You’ll be likely to also want to select from a clear range of markets to ensure the diversity of your portfolio is strong.
Thanks to the digital-first, customer-centric financial services market, you can look to a number of excellent platforms that can advise you on setting up your portfolio. These platforms can also give you the insight to be a more self-assured and self-sustaining investor. Many choose to start with that education process. Your best port of call is to start with learning a few of the basic instruments you can consider investing in.
Thanks to the digital-first, customer-centric financial services market, you can look to a number of excellent platforms that can advise you on setting up your portfolio. These platforms can also give you the insight to be a more self-assured and self-sustaining investor. Many choose to start with that education process. Your best port of call is to start with learning a few of the basic instruments you can consider investing in.
Different Sides of the Same Coin
Shares are only one of several ways to invest, there are several other options. For example, CFD (contracts for difference) or share dealing are alternative routes that many institutional investors will use, depending on how they want to construct a portfolio and how they’re prospecting assets in the long or short term. CFD stocks and investing are like two sides of the same coin - they’re both routes to take a position on an asset’s price changes. CFD trading and investing differ mainly through how you’ll actually get ‘exposure’ (to take a position that a price will go up or down) on an asset, for example, a company share or a foreign exchange market.
CFDs enable you to speculate on those changes without ever assuming ownership of the actual asset. Whereas investing means you’ll take direct ownership of the asset instead. Both mean you’re exposed to the price changes, it’s simply about the timeframes you’re working in. Many investors typically use CFDs if they’re speculating on a short-term price drop, for instance.
Share dealing sits alongside the two. Offering you the ownership of investing, you’ll need to commit the full value of the position upfront. CFDs are positions you can take with leverage, which means putting down a deposit of around 20% of the full value, typically. The leverage of an asset magnifies both gain and loss, so, yet again, it’s all down to understanding and personal preference before you begin.
At a high level, you’re in a good position to start investing after you’ve grasped a few of these key concepts. What digital platforms are finally doing is removing the jargon-filled, and somewhat inaccessible, culture that surrounded investing in years gone by. Access to these platforms is a great opportunity, but also one that deserves attention and patience to understand the world you’re entering. Like any financial product, it can be a strategic and useful tool - it’s up to you to approach with the right, realistic strategy in mind, and that begins with understanding.
CFDs enable you to speculate on those changes without ever assuming ownership of the actual asset. Whereas investing means you’ll take direct ownership of the asset instead. Both mean you’re exposed to the price changes, it’s simply about the timeframes you’re working in. Many investors typically use CFDs if they’re speculating on a short-term price drop, for instance.
Share dealing sits alongside the two. Offering you the ownership of investing, you’ll need to commit the full value of the position upfront. CFDs are positions you can take with leverage, which means putting down a deposit of around 20% of the full value, typically. The leverage of an asset magnifies both gain and loss, so, yet again, it’s all down to understanding and personal preference before you begin.
At a high level, you’re in a good position to start investing after you’ve grasped a few of these key concepts. What digital platforms are finally doing is removing the jargon-filled, and somewhat inaccessible, culture that surrounded investing in years gone by. Access to these platforms is a great opportunity, but also one that deserves attention and patience to understand the world you’re entering. Like any financial product, it can be a strategic and useful tool - it’s up to you to approach with the right, realistic strategy in mind, and that begins with understanding.