Investing with little time

Investing can be a good alternative to saving, although there are more risks involved. Books full of tips and investment strategies have been written, so that the layman can no longer see the forest for the trees. In my view, a complicated investment strategy is unnecessary, just common sense with a number of tips can already ensure decent capital growth.

Risk

Investing is always described as risky. Of course there is more risk than with normal bank savings, but the risk can be limited with a number of tips. In this article I will share some of these tips.

Start investing

Never use money that is needed for something at a fixed time in the future, for investing it is important that only money that is “left” is used. This does not necessarily have to be a lot, but due to the additional costs of the easy sites such as Binck and Alex , a starting amount of at least around 1000 euros is required. As soon as this money is available, you can start registering with either site. The advantage of these sites is that they offer a lot for little money. In addition, both are user-friendly. The money can now be transferred to the account number of the account on Binck or Alex, but purchasing shares still needs to be postponed.

Choosing stocks

The easiest thing to do is not to immediately invest in more complicated products, but to stick purely to shares of large companies. Choose a number of companies, about 10 in total: anything more will be too difficult to follow with little time. There are plenty of options on the investment site to look up all kinds of messages, analyzes and price targets for these companies, so do this for all these companies. These ten will become the basis on which we will invest. After reading the various messages, analyzes and price targets of the companies, it is necessary to monitor how these companies will develop. This still needs to be done without actually purchasing shares. Don’t just follow the investment news on the site, but also follow developments in the Netherlands and the world: my preference for this is BNR news radio, which can be listened to in the car at idle moments. A picture of the companies and the future possibilities of these companies is now slowly developing. This is important for deciding which shares to buy.

Buying shares

Now that the money is ready to buy shares and we are following 10 companies specifically, we have to wait for the right moment. What is this right time? That is something that can be decided on the basis of our own analysis that we have made based on the information from the investment site and developments in the Netherlands and the world.

An example:

At the beginning of the credit crisis , the value of an ING share fell to less than three euros, due to the high risk the bank was running. Now the bank’s risk was greatly overestimated by panicked investors, who were looking for security. Did the bank actually run that much risk? No. ING is so big that it is a bank that should not collapse because it will immediately take the entire economy with it. This means that the bank must be rescued if the situation is too bad, which is not possible due to ING’s size through state takeover. So the most likely situation that ING would end up in, if the bank was indeed doing very badly, was that the state would lend money to the bank to keep it afloat (which is what ultimately happened). After the crisis, the bank can pay this back and the bank can become healthy again. The risk at that time at ING was so small that it was negligible, the chance of a huge profit was very high. Those who had bought ING at the time therefore made some nice pocket money. Yet we should not be tempted by these situations to invest all our money in this. But if about three or four of the selected ten companies have great upside potential, things will become very interesting. Even if we have made a bad purchase and a worst-case scenario comes true, this will be absorbed by the profits on the other shares. In addition, we have plenty of time, after all, the money is “left over”.

Selling shares

Buying shares is not the hardest part, selling them is. After all, selling determines how much profit or loss is incurred. It is important to eliminate emotions, which can lead to very bad situations. Since we do not need the invested money immediately, we can safely leave it if things do not go well. Of course, it remains important to monitor the situation of the company: if there is a real chance of bankruptcy, it is better to withdraw the money. We can handle most other situations in which the shares become less valuable by simply waiting. When shares show a nice profit, it is often emotions that make us want to leave it there for too long. Stocks don’t keep rising forever, so make sure you sell on time. This moment can be chosen in a number of different ways, for example by selling the shares when they are about 5 to 10% below the last price target or by selling them at a predetermined profit . However, don’t wait too long, shares can suddenly drop due to bad news, corporate disasters or you name it. Even if the share continues to rise much further afterwards, our profit has been earned: so we have not done bad business. If we are in a long downtrend and we can still sell the stock at a profit, this is a smart move. During the downward trend we do not own any shares and we can wait patiently until a clear increase starts again or shares become seriously undervalued. It is therefore possible that we may not own a single share for several months in a row.

Time

A frequently heard argument for not investing is that it takes a lot of time. That is only partially correct. Of course, it takes a lot of time to get started, as a number of companies need to be vetted: otherwise we would be spending our money blindly. After that, my experience is that it only needs to take half an hour or less per day: we are not going to invest for the short term, but for the medium to long term. You can view the prices and news of the day in the evening, and you can follow the news in the car on BNR.

Efficiency

The mentioned method is not risk-free, but it can provide good returns. The most important thing is nerves of steel, analytical skills and patience. Do not be guided by emotions, but purely by reason. My own experiences with the return are around 10 to 30% per year. At the deepest point of the credit crisis, this was even 375% for one year. However, those opportunities don’t come around that often.