Finance is not a topic that is top of mind for many people. They feel passion for their job or company, and want to do that to the best of their ability. The same holds for students, who sink into their legal and medical books to become lawyers and nurses. There is, however, one common denominator across all these groups: they are part of the economy. It does not matter if you are a producer or a consumer, when you are using financial means to purchase or sell, you are part of the economy. Why then, do so many people neglect financial literacy as a top priority?
In the news, you often find headlines about billionaires and tax evasion, as well as insights into the world of real estate and the limited tax on capital. Some people tend to go with this flow, instead of wondering: how does the system that I live in actually work? Becoming financial literate starts with your own financial decisions. This ranges from doing groceries to buying a house and what you do with your savings.
While saving money in a savings account might sound like a secure and convenient method, it is one of the worst financial decisions. Especially in the current climate, where interest rates are near zero, you lose your money. With inflation (i.e., rising prices of products) rising, your money’s value is becoming less and less over time. This is why financially literate people invest their money.
This is a relevant question to ask. The reason why people do not invest? Financial illiteracy. Why? Because they do not know how financial instruments work. This is the foundation and should be taught to everyone. You do not need to understand every financially complex product, but the basics such as stocks and bonds are crucial.
If you have studied these products, you know how you can increase the value of your money. This is where the risk appetite kicks in. How much risk are you willing to take? The least amount of risk can be realized through an Exchange Traded Fund (ETF), which covers a broad range of stocks. This spreads your risk and allows for a safe return. Good examples for these ETFs are trackers for the S&P500 and the iShares MSCI.
If you want to dive into finance, a stock tracker can help you get a headstart. This is an application that provides you with insights into the products available. Not only does it provide you with real-time prices, but it also incorporates news and analysis. You can leverage these insights to further improve your portfolio.
One of the biggest enemies of Return on Investment (ROI) is human emotion. If you are trading, you will see continuous price changes. The sentiment comes into play and people will start making bad trades and lose money. In general, you can argue that (especially with a diversified portfolio) the value increases over time. Thus, it is of utmost importance to continue to invest and not get fueled by emotions. A stock tracker can help you, as it can provide you with notifications when it matters. Hereby you can grow your portfolio non-intrusively.
Interested to get started? There are many options out there to give a try. We recommend using Delta, an application that supports both traditional financial assets (e.g., stocks and bonds) as well as for cryptocurrencies.
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