Timing the market is incredibly difficult for expert investors, much less complete beginners. It is also time-consuming and emotionally stressful. Changes in stocks and crypto prices are unpredictable. No one knows what will happen and when it is going to happen. A better strategy is to invest regularly in excellent assets for a long time, and you don’t need to be an expert to win with this strategy.
Accrue’s steps for investing as a beginner:
1. Decide on a goal for your investment portfolio
Do you want to earn passive income? You should invest in dividend-paying stocks.
Do you want to hedge your wealth? You should invest in the stocks of big, stable companies (e.g. AAPL, MSFT, AMZN) or the top cryptocurrencies (e.g. BTC, ETH, SOL).
Do you want to grow your wealth? Invest in stocks of companies set to do a lot of growth or small/mid-market cap cryptocurrencies with lots of potential.
2. Create a portfolio of 5-10 assets
This is easily the most critical part — picking what assets you will spend the next 2-10 years investing in. As a beginner, how do you know what to choose? How can you tell that the fundamentals of an asset are solid and that it’ll give you decent returns on your investment?
There are a lot of places you can find information about excellent assets to invest in. A few of them include:
Large funds/holding companies: There are several large funds or holding companies with a lot of experience in investing and delivering decent ROI. You can find assets to invest in by looking at what they are investing in. A few examples are Berkshire Hathaway, BlackRock, and Fairfax Financial Holdings.
Accrue Collections: We’ve carefully curated some assets you can browse through on Accrue. You can find Collections for newbies, risk-takers, health-care stocks, Defi coins etc. Accrue also allows you to view the performance and market information about the assets in a Collection.
Analysis blogs/newsletters, news articles, financial releases, and general chatter in investment forums/circles: The Internet is a treasure trove of information about basically anything. Performing a quick Google search for assets/sectors you’re interested in should bring helpful information. Be careful not to take people’s word at face value. Always do your research and build conviction.
Assessing the fundamentals and building conviction
Now that you’ve found some assets, the next step is to assess your chosen assets and build conviction. Building conviction is crucial because that’s the only way to remain unbothered by short-term price volatility. As long as your goals and reasons for investing in an asset haven’t changed, you should not be stressed about daily price swings.
Things to look into when assessing stocks
Things to look into when assessing cryptocurrencies
- Website, Social media & Github accounts
- Discord/Telegram activity
- Revenue model
- Emission schedule or Token allocation
- Key investors & Top holders
- Listing, Project ranking
- Market capitalisation, Circulating supply, Total supply
- Price history
3. Invest regularly at your pace
If you start investing, you might see losses in the short term, but remember, as long as the portfolio’s fundamentals are excellent and your goals for investing have not changed, you should not be worried. Time in the market will more often than not beat attempting to time the market.
Whenever there’s a significant dip in the price of an asset you like and know will continue growing, you can use Accrue’s Flexi-plan to purchase a custom amount and add it to your portfolio.
We recommend looking at your portfolio every few weeks and doing a total portfolio health check quarterly, in line with your needs.
4. Taking profit
You should keep an eye or ear out for when assets in your portfolio reach an all-time high. An all-time high is when the price of an asset reaches its highest ever. It’s your cue to take some profit.
We recommend taking around 10-30% profit. You can buy yourself something nice, save the dollars on Accrue and earn interest or wait for when the asset’s price draws back to buy some more.
You need to take profit. It reduces your exposure to black-swan events that might wipe out an asset that you invested in.
That’s it! Our beginner introduction to investing.