Almost a decade has gone by since the beginning of the world financial crisis, which started with the bankruptcy of Lehman Brothers, which then triggered disruption and changes in all sectors of economy, thus a momentous revolution which is still going on today.
This crisis entailed the collapse of all stock markets in the world with remarkable damage for many, but at the same time it has created opportunities for others who had the possibility to purchase stocks and bonds even at 70% off the price.
The markets gradually recovered and went back to their pre-crisis framework, obviously not with linear but rather fluctuating trends; in addition, in these past ten years there have been other issues which lead to halving the rates due to economic and political uncertainties especially in the Euro zone (Greece, Italy, Spain, Italian banks crisis, Brexit).
Who has followed the situation and as a small investor has had the courage to invest part of their liquidity especially in stocks, without purchasing and selling (trader) – but rather buying and holding – has certainly had excellent yields.
For those who have only recently started following this economic world and would like to approach this DIY investment type, these are a few suggestions:
- First, follow a number of securities, possibly in different sectors, so as to understand which you appreciate most for their yields and stability: usually there are securities and sectors where variations are high and thus earning may be high, but so can losses. Others where variations are low, and the risk is low, but so are the earnings. We suggest focusing on leading companies in their sector, checking relevant budget data, which you may find on the internet.
- Figure out what is the level of the market indices you want to invest in and especially where they are; you will need to verify these latest years’ values, to understand whether they are growing or decreasing and in what percentage.
- Of course, when you find high securities, wait until there is a remarkable reversal (at least by 10/20%) before getting in.
- Decide what figure you are willing to invest, knowing you won’t be able to rely on it for a couple of years. Then, open a securities account in your trusted bank to operate online: of course, you will have to negotiate with the bank to keep purchase and sale commissions on securities as low as possible.
- At this point we may start: it is better to invest a small part of the amount set aside, around 1/5, as once you have purchased one or more securities – which you have been following for a few months – you need to keep in mind that they may decrease in value for unforeseeable reasons (politics or economics, for instance). At that point, you can get an average, by purchasing again the same securities at a lower price: thus, you obtain an “average” value, lower than the initial purchase.
- Obviously, you need to follow every day the trend of your securities: all you need are dedicated apps and a few minutes to exploit all market variations. Or you may decide – if you have purchased securities with good values, to buy and hold, for two or more years, thus obtaining their dividends (important topic which we will be back on).