Prior to the widespread flourish of the internet, investors had only a few ways to invest. This allowed only a few big players like institutional investors to trade in the market.
Lack of information and high commission fees were major barriers for retail investors. Thanks to the internet this is no longer the case. The internet has revolutionised the way investing is done.
With the prevalence of smart devices, investing has become so much easier. There are so many mediums through which one can invest through a broker and the number of brokers has also increased over the last few years. Brokers now bridge the gap between the market and investors around the globe.
Though brokers offer a lot of choice to the investors, different brokers have different rules and policies and it’s easy for any investor to get confused. There is so much information available in abundance and investors cannot be sure which is right.
So here are a few pointers that might help you make informed investing decisions & also protect your investments.
1. Educate yourself and stay informed
Before depositing funds to begin your investments, it’s important that you understand what kind of investment you want to make. You can trade in the stock market, you can also trade currency pairs, crypto currencies, or can invest in bonds etc.
There are always different options available to every investor but the choice lies with you to how and where you want to invest your money. So, a good place to begin would be to understand the market and how the different market instruments function. Like you need to start by understanding basic investing fundamentals, for stocks you need to know how to do stock analysis, for forex investment, first thing is to learn forex trading basics and strategies.
Once you have a rough idea of how the market functions, then you can decide which market you want to invest in. You have to get comfortable with a particular market since you will be required to constantly stay updated with the news.
2. Always Choose a Reputed & well-Regulated Investment Broker or App
After you have decided which market you want to invest in. You need to choose a regulated and reputed broker. Start by checking if the broker has all necessary licenses to conduct business in Nigeria, and has a local office or not.
Only if a broker is registered, you can be safe to use their platform as they have been approved by the regulatory bodies. You will be at risk of losing your money if you trade with unregistered brokers and you will not be able to recover your money in case the broker goes out of business.
Make sure you only use NSE licensed brokers to trade in stocks or indices. In case you are trading forex, make sure your forex broker is best rated in Nigeria, has a local office and is also regulated with top tier regulators like FCA or FCSA.
Regulatory bodies can penalise you if they find out that you trade through an unlicensed broker. So do your research on the history of the broker and what options they give to new investors. It’s ideal if you talk to investors who already trade with the broker.
3. Start with Demo Investing and devise an investing strategy
One of the biggest advantages of having so many brokers is that every broker gives demo money to investors to trade in the market in real time. This allows you to test your strategy in the market without risk of losing actual money.
You can understand how the market reacts and how it functions. You can see learn the controls of the platform and get familiar with it.
You can test different investment techniques & strategies and choose which suits you best. Once you are confident that you have learnt all the settings, then you can invest a small amount and open your Real Investing account.
4. Create an assorted portfolio
If there’s one rule that every investor follows then it’s to have different investments.
Experienced investors will tell you that never put in all your money on one investment. The reason being that if that investment goes bad, you are at the risk of losing all of your invested capital.
The entire market is volatile and it fluctuates rapidly.
If you place all your money under one investment and that market crashes, then you stand the risk of losing everything. It’s better to have different investments so you always have a backup or diversified portfolio, even if one investment goes wrong.
So, when you are drafting your investment plan and strategy, always look to invest in different options to give you better flexibility and surety.
5. Spot and Avoid/Protect against scams
Many brokers capitalize on the inexperience of the investors. Not all investors are aware of the conditions placed inside a platform. Everyone just accepts all conditions and signs onto a platform. This offers a great way for brokers to mention important conditions in between lines.
So, to avoid being tricked into accepting such dubious conditions, it’s always better to understand what you are exactly signing up for. Spare a few minutes and read all the terms and conditions. Do your research on the broker and what’s the history and etc.
If an investment scheme looks too good to be true then it’s often a scam as brokers will try to attract investors by offering unrealistic returns.
6. Avoid taking every advice you get
Every investor has their own plans and strategies. What works for them might not work for you. So, do not try and apply all advice you get.
It’s important that you talk to experienced investors and take in their point of view. But, take only what information which is useful to you and discard all other information.
Too much information can make you indecisive and leave you confused. Just keep in mind that not all advice is good advice.
7. Protect yourself and your Computer/Device from Online Attacks and Malware
When you are dealing with money on the internet it’s your duty to protect yourself before you begin investing. You need to be completely protected from all online attacks.
Within a matter of seconds, you can lose everything in your account. Make sure that you have a good anti-virus software installed in your computer that would protect your from risks of Malware.
A good anti-virus software will immediately block all threats like viruses, malware from unsafe website, and also help to remove them from your system.
Do not click on suspicious links which are sent by anonymous senders. There are a lot of spam emails which contain links to infected websites, or attached files, that can infect your device to take control of your entire system.
It’s important that you set a hard password for your investment account, so it reduces the chances of being hacked.
Don’t try to keep your personal information like your name, date of birth etc. as password, since it will be easy for hackers to break into your account.
Finally, be wary of what internet connection you are using, if you are using a public internet connection then any person who is connected to the same network can hack your system and steal all your data. So, avoid trading using a public network.
8. Conduct regular audits
Ensure that you do a routine check every month or every quarter to see where you stand in terms of your investments and returns.
Compare your initial goals and where you stand right now, see if there is any deviation. If there is any deviation, understand how the deviation might have occurred.
Check if you have overlooked any factors that are hurting your investments. If you understand where you have gone wrong then reassess your strategy and come up with a new plan and target. Use all the past experience and draft a better plan.
It always helpful if you understand what experiences investors do to minimise their losses so you also can have good plan to help you succeed.
9. Take a break
By some, trading in markets is compared to gambling as it gets highly addictive.
Once you get the taste of making money, then it’s hard for you to stop. This is also the case with losing money, if you start losing money, your inherent reaction would be to recover the lost money.
Trying to recover your lost money, you will make irrational decisions and lose even more of your money. When you are losing money, you get emotional and take bad decisions.
So, if things are not going well for you then its better you take a step back, take a break and rethink your strategy. Come back when you feel more energised and focused.
Take Note & be safe
It’s great that investors have so many options to choose from now. But without understanding the intricacies of the market and brokerages, it will be a hard for any investor. These points mentioned above will help push you in the right direction.
Ensure that you follow all the points to protect your investments. Always stick to your goals and strategies and don’t get swayed by the public.
Trust in your plans and follow them rigorously. Be patient and rest assured if you make informed investments, they will bear fruit in time.
