While the coronavirus may have caused significant upheaval and disruption to our everyday lives, it has also created new opportunities for individuals to make money.
This is best embodied by the world’s investment markets, with coronavirus outbreaks and subsequent lockdown measures having caused people to spend more time at home and target variable investment markets with their disposable income.
We’ve seen a particularly large number of younger investors take the plunge through 2020, with many utilising Reddit as a learning resource and increasingly accessible trading platforms to execute real-time orders. But what tips and steps should youngsters follow to make the most of their starting capital?
#1. Start Small and Scale Your Efforts Organically Over Time
Regardless of which markets or assets classes you look to target as an investor, it’s imperative that you look to start small and scale your efforts organically over time.
For example, let’s say that you want to initially take advantage of the forex market, which is highly leveraged and enables you to control disproportionately large positions with small deposits.
In this instance, you should start by trading just one or two major currency pairs as you continue to gain practical experience of the market, before diversifying your currency portfolio and considering alternative asset classes as you grow your bottom line.
From a risk perspective, it’s fair to say that younger investors can balance their portfolio to include a higher proportion of valuable and high-risk assets. This way, you can accumulate wealth at a time when you have fewer financial commitments (such as a mortgage), before consolidating your gains in later life.
#2. Manage Your Expectations
On a similar note, it’s important for all traders to have a clear understanding of their chosen markets and manage their expectations accordingly.
The reason for this is simple; as it leads to more informed decision making and strategies over time, while enabling you to set realistic financial goals and strike the ideal balance between risk and reward.
Another excellent way to achieve this objective is to make use of a so-called “demo account”, which can usually be utilised for a period of between three and six months and allows you access to a simulated and real-time market that’s completely risk-free.
#3. Open Your Mind When Diversifying Your Portfolio
If we look at the new generation of investors in their early 40s, 30s and even 20s, it’s reported that between 50% and 75% of them have an allocation in cryptocurrency.
This is indicative of an open and responsive mind, while it highlights the importance of considering alternative investment opportunities as a new trader.
It’s certainly important that you focus on diversifying your interests as an investor, as you look to create a balanced portfolio that can deliver optimal returns in various market conditions.
You don’t have to invest in crypto assets, of course, but the key is that you consider a wide range of markets and asset classes as you focus on diversification over time.