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The Psychological Aspect of Value Investing: Patience and Discipline

The Psychological Aspect of Value Investing: Patience and Discipline

by | Aug 3, 2024 | Personal Finance

The investment world is one in which theory and practice go hand in hand, but it is very important to consider also the psychological aspect of value investment, it requires patience and discipline not to get caught up in the trap of instant gratification and to resist the market fluctuations. That’s what we will focus on today, the psychological aspect of value investing: patience and discipline.

Psychological challenges – The impact of fear and greed

Fear and greed are two of the most powerful emotions that can significantly influence investment decisions, often leading investors to buy or sell at the wrong time. Markets can be volatile and unpredictable. Prices can fluctuate wildly in response to various factors, such as economic indicators or geopolitical events. During these turbulent times, it is tempting to react impulsively and make irrational decisions based on short-term market movements.

On the one hand, fear normally appears during market downturns, and it can cause investors to panic and sell off assets at a loss, even when most of the conditions that motivated the investment in the first place remain solid. This irrational behavior is driven by a desire to avoid further losses, but it often results in missing out on potential recoveries. The cyclical nature of markets means that downturns are usually followed by recoveries, and selling in a panic can lock in losses that would otherwise be temporary.

On the other hand, greed can drive investors to take unnecessary risks, especially during bullish markets. The fear of missing out (FOMO) can lead to overconfidence, pushing investors to buy overvalued stocks in the hope of quick profits. This behavior is often seen during market bubbles, where the desire for rapid gains blinds investors to the underlying risks. Greed can also result in holding onto winning positions for too long, ignoring signs that it might be time to sell. This can lead to significant losses when the market eventually corrects.

There are three concepts that can explain this behavior:

  • Loss aversion. People fear losses more than they appreciate gains. About this, there is a very interesting article that critiques the expected utility theory as a descriptive model of decision making under risk written by nobel prize winners Daniel Kahneman and Amos Tversky in 1979. It’s called “Prospect Theory: An Analysis of Decision under Risk”.
  • Overconfidence. People tend to believe their abilities and knowledge are better than they actually are, undertaking risky investments, thinking they can outsmart the market.
  • Anchoring. People rely heavily on an initial piece of information (the “anchor”) to make decisions, ignoring other important factors that can determine the best move.

Be patient.

In the world we live in, where instant gratification seems to be the norm, being patient is a challenge that requires strength, some kind of strength that is trained in a process of introspection and self-discovery that goes hand in hand with practical habits. 

We know financial markets are volatile and inherently cyclical, experiencing periods of rapid growth followed by corrections or downturns. Being patient in these moments is crucial. Instead of succumbing to fear and selling off assets during market drops, recognize these corrections as opportunities to purchase undervalued stocks at lower prices. By remaining patient and strategically investing during these downturns, you can acquire high-quality assets at a lower cost, positioning yourself for substantial gains when the market eventually recovers.

Patience equals focus on the long-term perspective. By patiently waiting for the value of an investment to appreciate over time, investors can potentially unlock substantial returns. Don’t forget about the benefits of the compound interest and how it works: by holding investments over an extended period, the returns generated each year are reinvested, leading to exponential growth and substantial wealth over time.

When you focus on the long term, you aren’t perturbed by daily market fluctuations. You don’t anxiously check your portfolio every few minutes, and you don’t lose sleep over a single bad day in the market. Your mental peace isn’t held hostage by the unpredictable movements of the market.

Have discipline.

The same goes with discipline, it’s another cornerstone of successful value investing that requires strength and training. It is easy to get swayed by short-term market fluctuations that can trigger strong emotional responses, leading to rash actions such as panic selling during downturns or overbuying during bullish periods. Such reactions conclude in impulsive investment decisions that often result in financial losses and missed opportunities. 

Discipline helps you avoid emotional or impulsive decisions, and keeps your focus on the objective that motivated the whole process in the first time. But it doesn’t only aid in achieving financial objectives, it also builds a mindset of stability and confidence. A mindset that will help you get through market’s (and life’s) ups and downs.

It begins with establishing clear investment criteria and adhering to them consistently, regardless of the market noise. By choosing an investment strategy like dollar cost average you are regularly investing a fixed amount of money into the market, despite its current state.

Keep in mind that discipline is not about suppressing emotions, but about acknowledging them and, at the same time, not allowing them to cloud your judgment.

A clear example of the rewards of discipline and patience in investing is the recovery of the stock market after the 2008 financial crisis. Investors who remained patient and disciplined while continuing to invest during the downturn saw significant returns as the market rebounded in subsequent years.

How to manage this psychological aspect

Managing the psychological aspect of value investing is crucial for maintaining a clear and focused mind. Mindfulness and stress management play a significant role in this process.

Mindfulness involves being present in the moment and aware of one’s thoughts, emotions, and surroundings – without judgment. In inversions, this means staying conscious of market movements and your own reactions to these changes without immediately reacting.

Stress management techniques are equally important to deal with the volatility and uncertainty of the stock market. Regular practices such as meditation, deep breathing exercises, and physical activity can help reduce stress levels and improve overall mental health. These activities help to calm the mind and body, allowing you to approach your decisions with a clearer perspective and reduced emotional interference.

By managing stress effectively and by practicing mindfulness, you can gain better control over your impulses, making it easier to have the patience to stick to the long-term investment strategy and have the discipline to avoid impulsive decisions driven by fear or greed.

Remember that incorporating these practices into an investing routine not only enhances decision-making but also contributes to a healthier and more balanced life. If you regularly practice these techniques, you will be better equipped to handle the emotional ups and downs of the market.

How TBI can help you

At TBI we truly believe in the importance of dealing with the psychological aspects of value investing: patience and discipline; as mentioned. And that’s why our service is articulated to help you. From reminders and alerts that we send you to keep track of your investment plan and to help you make decisions without being influenced by psychological factors, to our robust algorithm that allows you to gain confidence in the process to keep moving forward, and much more. We aim to make this apparently difficult process as friendly as possible. Don’t wait any longer and join us: https://theboringinvest.com/#/investment-board 

Conclusion

On the surface, investing appears to be all about numbers, data and cold hard facts. However, those who explore its depths realize that investing is both a psychological journey and a financial one. It’s a perpetual dance between fear and greed, between the desire for immediate gratification and the discipline of patience.

Both fear and greed undermine the core principles of value investing, which emphasize patience and discipline. To be successful in this amazing practice of value investing, advocate for a long-term perspective and focus on the intrinsic value of investments rather than short-term market fluctuations or the momentary stock prices.

Overcoming these emotional challenges that surround inversions requires discipline, implying setting clear investment criteria and adhering to them regardless of the stock market conditions. That’s how you make rational decisions that align you with your long-term financial goals.

We hope to have made clear the importance of the psychological aspect of value investing: patience and discipline give you the fortitude to withstand short-term losses for long-term gains. Remember that “investing is a marathon, not a sprint”.

How many stocks should you have according to your age?

How many stocks should you have according to your age?

by | Jun 28, 2024 | Investing for beginners

There are several approaches when it comes to portfolio adjustment or asset allocation determination. The best one may depend on specific financial circumstances, risk tolerance, financial objectives, and investment time horizon. Today, we bring you Benjamin Graham’s formula (100 minus age) so you can decide the number of stocks most convenient for you to own according to your age. Let’s learn how you can adjust your portfolio with Graham’s formula and how many stocks you should have according to your age.

Graham’s formula

First of all, let’s make clear what asset allocation means: it’s how investors divide their portfolios among various asset classes such as stocks, bonds, cash, commodities, real estate, etc.

Now, Benjamin Graham is a well-known figure in the investments realm because of his contributions to the community; among his books, we remark The Intelligent Investor, in which he proposes his famous formula “100 minus age”. It consists of subtracting the number of your age in years to 100 and using the result as the percentage of stocks you should invest in.

If you are 30 years old, the formula comes to 100 – 30 = 70 so the 70% of your investment portfolio should be in stocks, the other 30% could be in bonds or other assets. This approach suggests a major exposure to stocks in the youth, when more risk can be tolerated, and a major security in bonds (or other more stable assets) as the investor ages. By the way, this doesn’t mean that stocks can’t be safe, as we explained in a previous article.

Age-Based Investment Strategy

In your 20s and 30s, you have a longer time horizon for your investments to grow, allowing you to take on more risk with a higher proportion of stocks. Stocks typically offer higher returns compared to bonds, making them ideal for younger investors aiming for aggressive growth. At this stage, it’s crucial to diversify your stock investments to maximize potential gains while mitigating risks. Although bonds might play a minor role in your portfolio, their inclusion can still provide a safety net against market volatility.

As you approach your 40s and 50s, your investment strategy should begin to shift towards a more balanced approach, gradually increasing your allocation to bonds. This transition helps to protect the wealth you’ve accumulated while still allowing for growth through stock investments.

In your 60s and beyond, the primary focus of your investment strategy should be on preserving capital and ensuring a steady income stream. This means significantly increasing the allocation to bonds, which offer lower risk and more predictable returns compared to stocks. The emphasis should be on low-risk investments that safeguard your retirement funds.

Advantages and Disadvantages

On the one hand, one of the evident advantages of this formula is the simplified investment decision-making, as it provides a clear and easy-to-follow guide for investors seeking proper asset diversification. It notably helps balance risk and increase financial security; by reducing the number of stocks over time, it decreases volatility and protects accumulated capital.

On the other hand, one of the main disadvantages is that it does not take into account the individual circumstances of the investor, such as their specific financial goals, personal risk tolerance, and economic situation, nor does it consider market dynamics and changes in the economy. We know that these factors can profoundly affect the performance of our investments.

Conclusion

As we saw, it’s very simple how you can adjust your portfolio with Graham’s formula and how it works to determine how many stocks you should have according to your age; it just comes down to subtracting the investor’s age from 100 to determine what percentage of your portfolio should be invested in stocks. It’s a simple and accessible approach for investors seeking to balance risk and security in their portfolios throughout their lives.

It can be very useful as a starting point or as a general rule (rather than a golden rule) to apply in moments of confusion. However, it is important to understand its limitations. Ultimately, the key to a successful investment strategy lies in balance and continuous adaptation to individual needs and market dynamics.

Kiyosaki vs Ramsey – Who is right about how to get rich?

Kiyosaki vs Ramsey – Who is right about how to get rich?

by | May 31, 2024 | Personal Finance

Nowadays, we know that the best way to become wealthy is by working with money itself. There are various approaches -some contradictory, others complementary- on how to use money to build wealth. Today, we will analyze two viewpoints from two well-known figures in the financial community, they seem contradictory and incompatible. So, who is right about how to get rich? Robert Kiyosaki or Dave Ramsey?

Robert Kiyosaki

Let’s start with the author of the Best Seller Rich Dad, Poor Dad. The first rule that appears in his book is “don’t work for money”, this means: don’t stay in a job that allows you to live paycheck to paycheck, instead, you should get debt and invest – but not in the stock market. This may sound odd, let’s explain it in more detail.  

In a 2020 interview, Kiyosaki stated that he doesn’t care about money, yet he still makes money because he understands the system. By “system,” he refers to the contrast between how money actually works and the socially accepted lie about it.

Society sets a trap for us by saying: “go to school, get a job, work hard, buy a house, save money, pay taxes, and invest in the stock market.” For Kiyosaki, that makes you poor. Instead of being educated through institutionalized education, he promotes “studying money” and taking on debt to avoid having to work in economic dependency.

We acknowledge that it is important to understand and critique the system, but we find his stance somewhat exaggerated. These are strong, controversial statements, that can be subjected to critiques such as the following:

Critics to Kiyosaki’s approach

Not everybody can borrow money to buy assets, there are some limitations inherent to the financial system, for example, it’s a possibility that you don’t pass the requirements to get a loan because there are some very specific warranties and probably high interests that require sufficiently good assets to return the money and avoid bankruptcy. 

Kiyosaki also said that you shouldn’t invest in the stock market. But the reality is that stocks are business, all you have to do is look for a profitable business that will return the investment you made in the shortest period of time possible. The fascinating thing is that buying stocks allows you, while being a normal person, to buy a part of any business of your interest (as long as it runs in the stock market).

Dave Ramsey

Furthermore, Dave Ramsey is a well-known figure in the investment world, even though he has a radically different viewpoint from Kiyosaki.

Dave Ramsey summarizes what anyone seeking to build wealth through good personal financial management should do in 5 steps: 

  • 1st You need to have a written plan, a budget. Because no one accidentally wins.
  • 2nd Get out of debt. When you don’t have any payments, you have money.
  • 3rd Live on less than you make. If you are spending more money than you earn, you need to reconsider your spending habits or your sources of income. 
  • 4th Save money. Savings are fundamental to have a backup in case something doesn’t go as planned or something unexpected occurs, and to have a solid base to start investing with. 
  • 5th Be outrageous with money.

We think that this approach to investments makes it more accessible for common people like us to embark on a process of economic growth by trusting that our most valuable assets -time and money- are invested correctly.

Conclusion

As we made clear, there are some fundamental differences between Robert Kiyosaki and Dave Ramsey in terms of the strategy they believe in in order to get rich.

On the one hand, Kiyosaki believes in not saving, taking debt, and investing in business (not stocks). On the other hand, Ramsay believes in saving money, getting out of debt, and investing in stocks.

Even though Kiyosaki’s knowledge and experience is something to take seriously, in TBI we go with the Dave Ramsay approach, and that’s what we recommend to you: save and invest. That’s how you manage your money to become wealthy.

Dollar Cost Average – definition and put in practice

Dollar Cost Average – definition and put in practice

by | Apr 5, 2024 | Investing for beginners

There is a wide variety of strategies, approaches, and manuals that can be applied when it comes to investing. And while each investor has their style, determined by their goals, financial profile, and experience in the field; some strategies prevail and dominate over time due to their high efficiency. Today we will focus on one of the best investment strategies, simple and suitable for anyone, even more important for beginners. It’s called “dollar cost averaging” (DCA).

What is the Dollar Cost Average?
And How does it work?

Dollar Cost Average means investing for the same amount of money each month or each quarter, while the alternative option would be to invest it all in a single point in time. You can already predict what are the main advantages and disadvantages of DCA, and we will explain in this article why we highly recommend DCA.

If applied in common stocks, as the number of shares that can be bought for a fixed amount of money varies inversely with their price (the higher the price per share the lower the amount of shares you can buy with a fix amount), DCA effectively leads to more shares being purchased when their price is low and fewer when they are expensive. As a result, DCA can lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.

There are only two parameters that the investor needs to decide when implementing this strategy: the fixed amount of money available to invest each time and how often the funds are invested. This leads to an automatic investment system that doesn’t require much time, expert judgment and knowledge.

To have success with DCA it doesn’t matter the actual price of the stock nor the tendency. Regardless of that, the effectiveness of the method relies on the investor, who should respect the previously determined amounts and periods of investment. There’s no other secret than planification, perseverance, and a little patience.

Benjamin Graham, a man of renown in the field of investments, was the one who first coined the dollar cost average term. He said in his book The Intelligent Investor (Warren Buffet’s favorite book): [DCA] “means simply that the practitioner invests in common stocks the same number of dollars each month or each quarter. In this way he buys more shares when the market is low than when it is high, and he is likely to end up with a satisfactory overall price for all his holdings.”

Practical example

 Let’s suppose an investor decides to allocate $100 each month to invest in a fund tracking the S&P 500 index, which trades at different prices each month.

  • In the first month, the fund’s price per share is $50, so with the $100, the investor buys 2 shares of the fund.
  • In the second month, the price per share of the fund decreases to $40. With the other $100, the investor buys 2.5 shares.
  • In the third month, the price per share increases to $60. With the $100, the investor can only buy 1.67 shares.

After three months, the investor has invested a total of $300 and has acquired a total of 6.17 shares of the fund. If we sum the number of shares purchased and calculate the average cost per share, we find that the weighted average cost per share is approximately $48.53.

This example illustrates how dollar cost averaging allows the investor to buy more shares when prices are low and fewer when prices are high, resulting in a lower average cost per share compared to if they had invested a fixed amount at a single point in time.

Advantages and disadvantages of DCA

Let’s start with a disadvantage of DCA regarding transaction costs: the repeated investing called for by dollar cost averaging may result in higher transaction costs compared to investing a lump sum of money once. Additionally, in a rising market, investors may miss out on potential gains by continuously purchasing at higher prices.

Even so, a huge advantage of this strategy is that it can reduce the overall impact of price volatility and lower the average cost per share. It’s definitely a low risk and long term approach, by having this in mind you can reduce anxiety and put a break on impulsive decision making against changing markets.

It’s also convenient in both bull market and bear market contexts. If there is a bull market, previously acquired stocks get revalorized, it’s still the same amount, but now they are worth more. And if there is a bear market, dollar cost averaging allows you to buy more quantity of the active at a lower price.

Lastly, a major advantage for the investor using DCA is not having to make a decision on a day to day basis about the best time to invest the funds. Its simplicity makes DCA a good choice for those beginners looking to develop habitual or automated regular investing.

Investing in the wrong moment has proven to be very expensive for the investor, if there is a crash in the market after the investing moment it could take several years to recover from it. The stock market crashed in 2000, 2008 and 2020, roughly once every seven years. So we certainly know that the market will crash from time to time but the specific moment or year is impossible to predict. This is the main reason why DCA it’s so important. 

Peter Lynch once said “I know we´ve had 96 years of century and the market´s fallen 53 times, we have 53 declines of 10% or more, so 53 declines in 96 years, once every 2 years we have 10% decline. The 53 declines, 15 have been 25% or more, so 15 and 96 years about once every 6 years the market falls 25% or more. That’s what we call a bear market, you know that – and it’s going to happen. I don’t care when it’s going to happen. I would love to know, obviously it would be very useful to know when it’s going to happen. Doesn’t make any difference to me, corporate profits are going to be a lot higher 8 years from now, a lot higher 16 years from now, a lot higher 30 years from now. That’s what I deal with.”

This is what smart and good investors do, they don’t try to predict the unpredictable. Just avoid entering with the whole investment in the wrong moment by doing DCA and that’s it, you will avoid the pains caused by market volatility.

Conclusion

To conclude, we have made clear that the investment strategy of dollar cost averaging can be used by any investor who wants to take advantage of its benefits. You can mitigate the impact of market volatility, reduce the stress caused by trying to predict the unpredictable movements of the market and potentially benefit from lower average costs per share over time. Also, by spreading out investments over regular intervals, you can harness the power of compounding and smooth out the effects of market fluctuations.

While it may not guarantee substantial short term gains, its long term benefits are undeniable, making it a valuable tool for investors looking to build wealth steadily over time. Through consistent and disciplined investing, DCA has shown good long term results in a wide range of investments.   

Dollar cost averaging turns out to be especially useful to beginning investors who don’t want to take the risky decision of picking the most opportune moments to buy (which by the way, we consider no one in the world, not even a sophisticated algorithm, can consistently and accurately predict the best moment to buy or sell). 

It’s a reliable strategy for individuals seeking to navigate the complexities of investing while minimizing risk.

How to invest in stocks for beginners?

How to invest in stocks for beginners?

by | Mar 7, 2024 | Investing for beginners

The stock market emerges as a promising option for those looking to start investing, and initially, it may seem like an intimidating world due to its apparent complexity. However, it is, in fact, becoming increasingly user-friendly for those without prior experience. That’s why today, we aim to address some questions that may arise when venturing into investment through buying and selling stocks. So, how do you invest in stocks as a beginner?

WHAT ARE STOCKS?

First of all, let’s define stocks (or shares) as a partial ownership of a company. When someone owns shares of a company, they become a shareholder and share a proportional part of the company’s assets and profits. In a simplified but accurate manner, we can say that the functioning of the stock market is as follows: companies listed on the stock exchange, seeking funding, raise capital by selling their shares, while investors, looking to profit from their money, earn returns by becoming shareholders.

Companies issue shares that investors buy and sell on the stock market through brokers, at a price determined by supply and demand. Thus, shareholders benefit from the appreciation of stock prices; as the price rises, their wealth increases.

FINANCIAL PROFILE

To start investing in stocks on the right foot, it is crucial to have a clear understanding of one’s financial profile. This includes accurately determining financial goals, available budget, investment timeframe, and risk tolerance. Several factors influence this matter. At TBI, we believe the best way to address them is to take a moment for honest reflection on one’s current situation, be realistic about economic objectives, and maintain discipline in following the plan for their achievement.

Now, we would like to clarify the mentioned risk tolerance. The truth is, nobody wants to lose money, but every investment involves risk. However, some investments are riskier because their prices are more volatile –meaning they go up and down quickly– (for example, cryptocurrencies), while others are less risky because their prices are more stable (for example, government bonds). It is important to understand the volatility of the stock market and consider long-term investment as a strategy to mitigate risks, as this makes price fluctuations less relevant over time. 

At TBI we like to define high risk investments not as investments but as speculation, speculation is fun, we get it, but it won’t make you rich (if you’re going to do it anyway at least don’t put more than 5% of your total investments at this risk). Very low risk investments like treasury bonds or similar acts as a hedge against inflation and it won’t make you rich either. Summarizing, if you want to learn how to invest in stocks, independently of your risk tolerance, invest in real businesses, diversify your portfolio and invest for a middle or long-term horizon.

It is essential, therefore, to establish clear financial goals that provide direction and help guide investment decisions toward specific outcomes, estimate your optimal amount of monthly investment and check the effect of compound interest in our investment planning section; to recognize one’s risk tolerance find the risk report of a fund you’d like invest in and check the Drawdown analysis (this analysis gives you a metric of the maximum possible loss that could be reached, it measures the difference between each moment value and the previous highest value), find below the Drawdown figure for TBI and see that it took less than a year (from October 2022 to June 2023) to recover from that low level to the previous peak value, not quitting in bad times is a key part of investing and obtaining profits with time. 

All these strategies and reading will make our entry and stay in the stock market more enjoyable, avoiding some unpleasant surprises due to disorganization and lack of knowledge.

HOW TO OPEN A BROKER ACCOUNT?

What is a broker? It is an intermediary between the investor and the stock market, making the buying and selling of stocks possible. Their main function is to execute transactions on behalf of investors, but they can also provide additional services such as financial advice, market research, and trading platforms. In simpler terms: a broker is a financial institution where you deposit funds to buy or sell stocks, bonds or other financial assets.  

Each broker has its own characteristics, so it’s best to select a broker that aligns with your financial profile, considering your specific needs and objectives. And also contemplating some factors such as fees and commissions, minimum amount and deposit methods, friendliness of the platform, security and regulation. 

Some of the best brokers to invest in stocks are:

  • eToro
  • Robinhood
  • Interactive Brokers
  • Fidelity Investments
  • E*TRADE

INVESTMENT STRATEGIES for beginners

To make the most of our time and money invested in the stock market, it is important to understand some terms related with financial strategies like: portfolio diversification, short term (active hand) vs long term (set it and forget it) approaches, and stock analysis – fundamental and technical.

Diversification involves spreading the investment (funds) across a variety of assets, such as stocks from different companies or sectors. This allows mitigating potential losses by reducing the risk associated with the volatility of a single stock and taking advantage of growth opportunities in various areas of the market without relying exclusively on a single asset.

While a long term focus will always be our best ally in building solid and sustainable wealth over time -boost by compound interest-, there are also short term investments that seek to capitalize on rapid market movements, like intra-day or short term trading. These are often high risk investments, and as mentioned earlier, we do not recommend them because they involve speculation.

There are two ways to approach the stocks you own: “active hand” or “set it and forget it”. An active approach involves regularly monitoring and adjusting the portfolio in response to short term market changes. On the other hand, the “set it and forget it” approach involves building a solid portfolio and maintaining it for the long term, trusting that diversification and the quality of chosen assets will yield positive results over time; it requires the discipline to resist the temptation to react or try to anticipate the next stock market move. Logically, an active approach requires higher knowledge and more time, reasons why we don’t recommend this approach for beginners that are just learning how to invest in stocks.

Finally, there are two methods of analysis in the stock market: fundamental analysis and technical analysis. Fundamental analysis focuses on evaluating the financial health and growth potential of a company by examining fundamental data such as revenue, earnings, debt, expansion plans, and management reports; it can be useful for determining whether the price of a specific stock at a given time is overvalued or undervalued. On the other hand, technical analysis relies on the study of historical price patterns and trading volumes, focusing more on market trends and stock charts, with the goal of predicting future market trend.

PORTFOLIO MONITORING

Once we have bought stocks and diversified our portfolio, monitoring and periodic adjustments come into play as ways to preserve the success of our portfolio. This involves determining a monitoring frequency, evaluating the performance of our assets in relation to our goals, and rebalancing the portfolio if necessary.

Staying informed about market conditions, economic and political indicators, and any factors that may impact the performance of our portfolio is crucial. These habits constitute a process of risk assessment and identification of growth opportunities, culminating in effective management of our investments.

This regular monitoring and adjustment not only drives the adaptability of the portfolio but also provides the opportunity to learn and refine investment strategies as financial circumstances evolve. Ultimately, it allows us to continue steadfastly on the path toward achieving our long term financial goals.

ADDITIONAL RESOURCES

Thankfully, the investment assistance for beginners that are adventuring in this world is increasingly growing nowadays. One can access numerous platforms that provide educational data and financial advice.

At TBI, we offer an ideal service through a user-friendly platform for beginners looking to learn how to invest in stocks or starting in this field with the hope of building wealth and achieving their financial goals. 

We even have a tool to start investing in 4 simple steps (register for free in the app to see the following feature): 

1. Set your investment goals

2. Open a broker account

3. Buy your first sock

4. Diversify your portfolio

Our top-ranked stocks are profitable companies, large enough, and at a low market price. These are companies with good management and financial solidity. We use our own algorithm to build a financial score and identify companies that will not have any liquidity or solvency issue

We have conducted numerous analyses on our dashboard to assess our investments and have concluded that the return, while considering some volatility, averages 14% annually. It is an excellent opportunity for those seeking returns on their savings regardless of your experience in the subject. 

By leveraging these additional resources, beginners can approach stock market investment with confidence and gradually build a solid foundation of knowledge and skills. 

CONCLUSION

Having explained what stocks are and their basic functioning, we’ve laid the foundation to further develop some fundamental concepts that beginner investors should be aware of. The initial steps include determining one’s financial profile, considering financial goals, available budget, investment timeframe, and risk tolerance -with the relevant clarification on this last matter-; and opening an account with a broker, the intermediary between the investor and the stock market, through which financial transactions are executed.

To succeed in the process, we propose some financial strategies such as portfolio diversification, adopting short term (active hand) and long term (set it and forget it) approaches, and conducting stock analysis – both fundamental and technical. Additionally, we emphasize the importance of portfolio monitoring and periodic adjustments based on market changes.

We conclude with an additional resource such as the professional financial advisory service provided by TBI, from an easy-access platform, very simple to use, dynamic and visually attractive.

We hope to have showed how to invest en stocks for beginners, addressed common questions that arise when starting to invest and successfully outlined the fundamental guidelines that anyone looking to take control of their financial future should consider. We understand that the beginning of this investment process can be intimidating, but it is undoubtedly a challenge worth undertaking. We recommend patience and calmness, as over time, it will become increasingly easier, allowing you to enjoy the fruits of a job well done.

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