After the sale of our business, an entrepreneur needs to be careful before investing in the capital markets and directly in companies. However, there are some traps to avoid.
Finding appropriate investments
Before committing to anything, take the time to talk to financial investment professionals about making the right investments. They will guide you on the right paths according to your image and your assets. Evaluate the means necessary to protect your lifestyle for the rest of your life and set a financial ceiling for your investments, projects, real estate, etc. Set a goal for each investment.
When can you start investing?
If you are under 30, it’s the right time to invest. Because time is the most important ally in financial investing. Even if you don't have a lot of capital, there's nothing to stop you from investing small amounts. These investments will help you prepare your assets and your future. There are tools without entry fees that allow you to make regular withdrawals with small payments.
On a small scale, we recommend precautionary savings to prepare for unanticipated expenses. The home savings plan allows you to save before acquiring your main residence in the future. Finally, life insurance offers you the flexibility to carry out all your wildest projects.
The difference between stocks and bonds in the stock market
A company continually needs to grow. To finance its development, investors buy shares in the company. As an investor, you become a partner in the company and a stakeholder. You become a shareholder of the company and you can also participate in the decision making process at the general meeting. The more shares you have in the company, the larger your share of the capital will be, and in case of income, the company can pay you a share of the profits in the form of a dividend. But beware! The dividend is uncertain, because if the company you invest in goes bankrupt, you will be penniless.
As for the bond, it works like a bank loan. You lend money to a company that needs to invest or pay down debt. In exchange for your share, the company gives you an IOU in the form of a negotiable debt security. Bonds have several advantages: you lower the risk of loss in your portfolio and, unlike stocks, your rate of return is fixed and known in advance. With the return of inflation in 2022, central banks had to raise their key interest rates. As a result, this led to an increase in mandatory rates.
Don't forget to stay informed
It is necessary to follow the companies in which you invest to see in real time the progress of the project launched. Time should be set aside to study the graphs, spreadsheets and slides provided to you at your leisure.
As a reminder, you are not immune to the near or total loss of your invested capital. We advise you to diversify your investments in order to guarantee your capital in a low return savings. The panel of choices is wide: SMBs, life insurance, savings and open-end investment funds.
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