3 frequent mistakes to avoid when investing

 Those who leave money in the current account not only forgo any returns, but leave the assets at the mercy of fixed costs and inflation. We know it's never a good idea to leave a large amount of money in your account. Therefore, it is better to invest, but be careful not to make some mistakes, common in the do-it-yourself approach and in managing your money, which can cost you dearly and to which you must be careful.

In fact, there are many incorrect behaviors that can be caused by an approach conditioned by emotion or that derive from popular beliefs, including:

1) Giving too much importance to real estate: houses represent two thirds of the wealth of United State families (source: Bank of Italy - The wealth of United State families) but contrary to what is believed their value often does not protect against inflation. The properties are subject to significant taxes, require constant maintenance and management costs and their sale includes costs in the order of 4 - 5% against 0.1 - 0.2% of a direct investment in securities.

2) Not respecting the correct time horizon : often United State families, driven by the search for something “safe”, invest in short-term instruments such as Deposit Accounts, also to meet medium-long term needs.

3) Timing errors : even when they invest in financial products consistent with long-term objectives, families do not derive the potential benefits because they tend to enter the market when it has already risen for some time and to sell when it is at its minimum values.

What are the solutions to avoid running into these errors?

There are rules that, if followed in a disciplined manner, allow you to achieve your goals with controlled risks.

The first good rule of thumb for any investment, regardless of the amount in question, is diversification , that is, you should consider several financial instruments, different from each other: by doing so you will not accuse the losses on the entire portfolio. Diversifying, even by geographical area, is the first way to counteract the volatility of the markets.

Furthermore, those who decide to invest must set a time horizon, preferably medium-long term , and try to respect it, taking into account that the portfolio may undergo temporary decreases linked to the inevitable variability of the markets. The mistake to avoid is to sell at the first market turbulence, with losses which, probably, respecting the fixed time horizon, could be canceled. In the long run, a well-diversified portfolio of stocks pays more than a bond portfolio.

Finally, it is necessary to have clear one's investment objectives, consistent with one's personal and family characteristics, and to keep the course to reach them without being distracted by the markets: this is the perfect way to avoid running into the errors described above and to give greater value . to their savings.

For this reason, contacting a consultant, able to propose the best solution to grow your portfolio over time and who tries to limit risks, is the best answer! A professional acts in a continuous and disciplined manner to keep the risk level of the portfolio in line with the investor's profile and to help the investor achieve his or her long-term objectives. Through counseling you can reduce the role of chance and emotionality!

Posted by: John Labunski

 

Where to start with the financial management of your business

 Setting goals and knowing the way to achieve them is essential to have the best results in finances

Financial management is one of the areas that most deserves attention in business. She is the one who will show if your company's health is fine or if it needs some adjustments. But how to do this administration? It all starts with financial planning and goal setting. They are essential to know where and how you want to get there. Do you know what your business's first financial goal should be?

The first objective that you must have in the financial management of your business is to reach the break-even point. You may have heard of it already, but let's talk a little more about how to achieve it and how to know if this goal has been achieved or not.

Let's start by understanding it very clearly: break-even point is the minimum necessary that you must invoice per month to cover your costs and expenses, and not have a loss. Achieving this break-even point in your company's finances should be the first goal to be pursued with all commitment. That is, having enough entries to cover all expenses generated in the month. This point has no gains, at first, but also does not generate a negative balance.

But in order for you to know how to calculate the minimum you need to bill per month to avoid losses, understanding your costs and expenses is essential. All financial projections start from the analysis of this data, it is not possible to work financial goals without them. You can't even know what your break-even point is. That's why it's so essential to take the time to raise your company's costs and expenses in a detailed and clear way.

So, after all this financial control, from the moment you generate enough revenue to cover your costs and expenses, you've reached your break-even point. The best part comes from there. After reaching this goal, what generates revenue above this point is your profit margin. What we call the economic equilibrium point.

So, the profit is nothing more than a consequence of its sales, being very well managed in terms of expenses and taxes, and the difference is the much desired profit. To achieve this financial success, it is necessary to focus on management, planning, having clear goals and the right strategy.

It's always worth spending time on your business's financial planning to reap the dreamed benefits of organized financial management.

Posted By: John Labunski Finance Expert