Anyone who leaves the money in the current account not only gives up any returns, but leaves the assets at the mercy of fixed costs and inflation. Leaving a large sum of money in the account we know is never a good idea. Therefore, it is better to invest, but being careful not to make some mistakes, common in the do-it-yourself approach and in the management of one's money, which can be expensive and which must be paid attention to.
In fact, there is much incorrect behaviour that can be caused by an approach conditioned by emotion or that derive from popular beliefs, among these: 1) Giving too much importance to real estate: houses represent two thirds of the wealth of United State families - The wealth of United State families) but contrary to popular belief their value often does not protect against inflation. Properties are subject to significant taxes, require constant maintenance and management costs and their purchase and sale includes costs in the order of 4 - 5% against the 0.1 - 0.2% of a direct investment in securities. 2) Not respecting the correct time horizon: often United State families, driven by the search for something "safe", invest in short-term instruments such as deposit accounts, also to meet medium-long term needs. 3) Timing errors : even when they invest in financial products consistent with long-term objectives, households do not reap the potential benefits because they tend to enter the market when it has already risen for some time and sell when it is at minimum values. What are the solutions to avoid running into these errors? There are rules which, if respected in a disciplined way, allow you to achieve your goals with controlled risks. The first good rule for any investment, regardless of the amount in question, is diversification , i.e. one should consider several financial instruments, different from each other: in doing so, losses will not be charged on the entire portfolio. Diversifying, even by geographical area, is the first way to counter market volatility. Furthermore, those who decide to invest must set a time horizon, preferably medium-long term , and try to respect it, bearing in mind that the portfolio may undergo temporary declines linked to the inevitable volatility of the markets. The mistake to avoid is to sell at the first turmoil in the markets, with losses that could probably be canceled if the time horizon is respected. In the long run, a well-diversified portfolio of stocks performs better than a portfolio of bonds. Finally, it is necessary to have clear one's investment objectives, consistent with one's personal and family characteristics, and to stay on course to reach them without being distracted by the markets: this is the perfect way to avoid running into the errors described above and to give greater value to your savings. For this reason, contacting a consultant who is able to offer the best solution to grow your portfolio over time and who seeks to limit risks is the best answer! A professional acts in a continuous and disciplined way, to keep the risk level of the portfolio in line with the investor's profile and help the latter to achieve their long-term goals. Through counselling you can reduce the role of chance and emotion! Share by: Salvatore Magaraci
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