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Useful suggestions on how to invest and earn

One can invest and save not only in bank deposits. The goal of this handbook is to inform about the wide range of alternative investment opportunities available to any investor. The target audience of this handbook is anyone who has established or plans to establish savings in the thousands (but not in the many millions) and who basically understands or is ready to learn what shares, bonds, investment funds and similar terms mean. The handbook content is regularly updated.

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Table of contents

Preparation

Investments in stock exchange shares

Loans/bonds

Other investments

How to prepare before investing

Before starting any investment activity, it is important to prepare for it. Preparation is everyone's own homework, for which we will try to provide the necessary information and advice with the help of this investment guide. The preparatory stage includes reflection and decision-making on the following topics:

  • Defining the goal - why am I investing? Am I building long-term savings, a short-term reserve, saving for a bigger purchase or protecting against inflation? Setting a goal will greatly influence your future choices. For example, if you want to invest for old age and you are now 30 years old, your choices in investment instruments would be radically different if you were saving for the purchase of a house, which you would like to do in three years;
  • Understand your risk tolerance and interests - know yourself. Understand, first of all, how cautious you are - are you afraid of risk or are you on the contrary - go for it. Investment risk arises both from the possibility of losing an investment and from rapid fluctuations in its value. The formula always works - the higher the risk, the higher the potential profit. Also, define how much time you would like to spend creating your investment portfolio, as well as whether there is an area of investment that particularly excites you. For example, if you are interested in technology and technology companies, investing in shares of such companies could be not only an investment, but also an extension of your interests and hobbies. An interesting tool for determining your investment risk profile is offered by the Wealthfront robo-consultant (questionnaire in English);
  • Create your own investment plan - prepare a strategy. In accordance with your goals, interests and risk tolerance, develop a plan in which investment assets you will invest your funds. Also think about how you would like to make these investments - gradually/regularly or by accumulating a larger amount and making investments at the same time. Developing an investment plan and strategy is a broad topic, and we describe it in a separate article;
  • Understand taxes and form - will you invest as a private person or a legal entity? Think about how the income from your chosen investment plan is taxed. Do you have to declare them yourself or are they withheld before payment? Can I write off the loss when my personal tax is calculated? A tax-efficient investment vehicle for purchasing public financial instruments (bonds and stocks) is an investment account. This simplifies the declaration of income and allows you to effectively postpone the payment of personal tax. But keep in mind that from an investment account (at least at the moment) you can't invest in, for example, crowdfunding platforms. For investments over EUR 100,000 it can be more convenient to invest through a company set up for the purpose, which in several European countries defers the tax until the profits are paid out as dividends. Unlike an investment account, this tax deferral will apply to all types of investments (not just public financial instruments). Minus – in order to purchase financial securities, you need to purchase an LEI code, and additionally cover accounting and other administrative costs.
  • Provide infrastructure - prepare yourself technically. To start investing, depending on the chosen investment strategy, it may be necessary to open securities accounts, secure remittance limits and perform other preparations.
You can think of answers to these questions, write them down or discuss them with someone ( including us ). In our opinion, the main thing is to do this homework before starting the investment, in order to reduce unpleasant conclusions and lessons during the investment process.