How to make regular investments?
Regular investing is one of the most effective ways to value your savings and achieve your dreams and goals.
Maybe you have everything you need and you’re not thinking about the future yet, but it’s worth a try. Regular investing is the most effective and affordable way to appreciate or accumulate money for the future. The purpose for which you invest is up to you – do you want to buy a small house for retirement, build up a reserve, pay for your children’s studies abroad or perhaps want financial independence in retirement? The basics are to have a bank account and a certain amount of money that you can spare from your income each month, which you can dedicate to regular investing.
The goal of investing is to build some value that will be worth more in the future than it is today. Regular investing works just like that, when you regularly set aside a certain amount of your monthly income (generally 5-10% of your monthly income is recommended). The amount you set aside for investing can be in the hundreds of crowns or thousands. You are free to adjust the amount as your life situation develops. You can start investing at any time and you don’t have to wait for the right “timing” as with a lump sum.
The principle is simple – you send the same amount of money you buy units for on a regular basis, with the price based on the market. Over the long term, you are investing at an average price. So you can benefit from the fluctuations in the value of the fund as you buy on average at lower prices than single investors. If the markets are up, the units are more expensive and if they are down, you buy at a discount.
For those who are worried about investing larger lump sums or are just starting to build up reserves, regular investing is the ideal choice. In practice, it has been shown that this form can protect against the risk of short-term declines in the value of an investment in the longer term.
Even without in-depth knowledge of finance, you can invest your savings comfortably. You just need to choose the right investment products. An investment portfolio can be set up very conservatively, but also dynamically. It is always tailor-made for the individual client. The investment specialist will go through an investment questionnaire with you during the meeting to assess the suitability and appropriateness of the investment. This prevents you from investing in products that you know nothing about. You can initially start with smaller but regular amounts and increase them over time.
Whether you invest monthly, quarterly or annually is up to you. You can invest without having to follow the stock markets. An investment specialist does this work for you. You decide how much to invest and for how long. By investing regularly and over a long period of time, even smaller amounts can appreciate in value and turn into a sum that will pleasantly surprise you.
In the example below you can see a regular monthly investment of CZK 2,000 for 15 years.
We all have a lot of commitments and expenses, so it’s often not in our power to put aside more than a few hundred pennies a month. But we can either keep these in our wallet and save them for a rainy day or invest them in our future. But they won’t earn or add value to our wallet in any way, and we’ll usually be able to spend them before a few years. Moreover, it is in these times that rising inflation is taking an increasing bite out of the value of our money.
If you would like to know more about regular investing, please do not hesitate to contact us to arrange a free consultation.
In the next article, we will discuss ways to appreciate and reduce the impact of rising inflation on your assets.
Author: Michal Němec / MINEFI, Private Financial Advisor
Office Ostrava: Masarykovo náměstí 38/21, 702 00 Ostrava
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