Investment and discipline
2020 has become the year in which many people have found their way to investing. Because of the, almost non-existent, savings interest rate and because of Corona, investing is suddenly more popular than ever. But not everyone makes the desired returns. And that has everything to do with discipline.
After the first lockdown of 2020 and the reports about the savings interest rate which went to 0%, waiting lists arose at the largest brokers in the Netherlands. Almost overnight, the demand had become much higher than what the brokers could handle.
Roughly speaking, two types of "new" investors were suddenly added. The group with assets of more than €250,000 that were confronted with negative savings interest rates that were looking for other ways to earn a return and the group with significantly smaller (or no) assets that invest as an alternative to saving.
These new investors all had little or no experience with investing, and although a large proportion of these new investors were immersed in the subject, there was also a group that almost blindly threw themselves into the investment adventure.
Investors who started investing this year will now see mostly positive figures. An encouraging thought. But will this continue to be the case?
Investing requires discipline
In order to be able to invest profitably yourself, discipline is required. It takes something from you. Not every new investor has this discipline. The following 8 tips are a minimum requirement for every independent and novice investor to learn more about yourself.
1. Only invest with money you have left.
There are now poignant stories of people who put all their savings into investments and then totally evaporated. Or even worse: people who borrowed money to be able to invest quickly and ended up left with a debt. You invest with money you don't need within a short period of time.
Do you want to invest once? Do you want to deposit monthly? Determine your budget, evaluate it and adjust it if necessary. Always keep your finger on the pulse.
3. Make an inventory
Look at someone who's been investing for a while. Then start with a low amount yourself, an amount you can miss. Practise money, so to speak. Invest this in an asset that you have followed for a while, and which you think suits you well. In this way you get used to the fluctuation in the market. They are always there.
4. Long-term investment
Getting rich quickly from investing is actually only possible for a small number of people. So don't think you belong to that small select group. Investing goes with ups and downs. The shorter the period in which you invest, the less time there is for a market to recover. Those fluctuations from the third tip. So give it time, and don't panic at the first down. In addition, long term investing provides an extra advantage: compound interest.
5. Transaction costs
With traditional investing, you pay an amount per transaction. This can be quite paperwork. So pay attention to this when buying and selling. This also applies to investing via an intermediary. You pay not only the transaction costs but also a fee for the intermediary.
6. Risk assessment
Not everyone is suitable for dealing with high risks. If you lie awake when the market value drops by 10%, you can take this into account in your investments. Just the same the other way around. If you don't lie awake, then you may dare to take more risk. Determine this in advance and adjust your investments accordingly.
7. Risk spreading
Investing always involves risks. There is no such thing as risk-free investment. Unfortunately. To reduce the risk, you can choose to spread the amount you invest over different types of investment options.
8. Inform and learn
If investing is new to you, a lot comes your way. A lot. Make sure you keep yourself informed. Don't you know something? Then check it out. Sign up for newsletters, read blogs and articles and make sure you keep yourself well informed. It's time consuming, but worth it if you want to invest in a good way.
So the new investors have won quite a lot last year. But actually, it's just starting now. Because investing yourself also means that you can't sit back and relax. What do you do when the prices drop again? How far do you want to go with active investing?
Edward, an experienced investor, even set his alarm clock for the night. "There must be another way, mustn't there?" he kept asking himself.
Many new investors do not have the discipline needed to invest profitably. And that's not crazy at all. Nothing human is strange to us. It also takes quite a bit from you to be able to invest independently.
Fortunately, there is also an alternative available: automated investing. Until recently, automated investing was only available to the richest 3% on earth. They had access to the best trading strategies through (among others) hedge funds.
The principle is not difficult. A trading strategy is translated into an algorithm and this algorithm will invest for you. This algorithm runs on a super computer and is designed to get in and out at the right time in order to achieve the highest possible return.
Automated investing via the BOTS app
The discipline that you need if you are going to invest yourself is taken over by these super computers. Convenient, but a pity that this was only available to people who can step into a hedge fund with a lot of assets.
This had to be done differently, which is why the BOTS app was developed. An open platform on which expert developers offer trading strategies with which you can invest. With the BOTS app, everyone now has access to automated trading. You don't need a lot of capital for it either: you can start from as little as €50,-. At BOTS we want one thing: to turn the world of investing upside down. Because this way of investing should be available to everyone in the world.
Edward has now almost completely switched to automated investing: "Automated investing is really the future" according to the experienced investor. "I still invest myself, apart from the BOTS app, but the biggest danger remains keeping your emotions under control. You really need an iron discipline, and I don't always have one". He stays as quiet as he continues: "If you think you've won by acting manually, you've actually already lost. That's why the BOTS app is such a godsend."
Investing is for everyone
Everyone should be able to invest. And now they can. With BOTS. Are you interested, but your question hasn't been answered yet? Take a look at the FAQ's on our site. Or contact us, we will gladly explain it to you in person.
Need any help with anything?
If you still have questions about the BOTS app, do not hesitate to contact our support department.
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There is no such thing as risk-free trading. It is possible to lose (part of) your stake.