Key question: How will your investment be safe?
Investment security is the foundation of all financial planning. Just as you would not be able to build a house without a solid foundation, without it, the plans built on it will come to collapse.
When you decide to invest, you do so in the hope of making a profit later, not to get “chunky” statements before you pay. If you want to see even nicer returns on very nice statements, I can produce it in large quantities for you even without the invested amount. And I guarantee you will be able to do nothing with it in the same way as you are with an escaped capital with an unsecured investment.
Before we look at how a safe investment is structured, let’s look at some warning signs that if you see, you’d rather run very far.
Warning signs in the field of investment security.
Most scammers tend to lead you based on conspiracy theories, perhaps trying to make you to decide based on emotions. Neither is a good solution, because we make an investment decision with a cold head.
“I made a profit of HUF 19.530 / 50 $ from an investment of only HUF 200.000 / 500 $ in a single day and they also undertook a guarantee”
A favorite of fraudsters who act as pyramids. A man from far away says what he wants anyway.
However, it is necessary to be able to make such a profit from something that no legal device can do permanently, without slope and stagnation, especially with guarantees and 100% security.
A lots of things can be added to this:
- with some scarcity (“You can only register for 10 days” / “only 5 people can register under you, no more”)
- with geographical restriction (“Available from this country only until the end of the month”)
- by instilling fear of being left out (“Banks / lizards lobbied to prevent more of these”)
It has a very professionally built machinery behind it, but it is typically not operated by a company that is reputable and well-known. Instead, your money lands on the account of a completely unknown company.
How It Works?
What typically happens is that the money of the new entrants is paid out to the above. As the system spins, everyone will see that there is a surefire way to be a millionaire overnight. After all, there’s the credit on the statement (just try to pick up the multimillion, then the fine print will come).
What about when momentum drops?
It’s like on the tram: please be careful, the doors will close. That is, the company never seen before will disappear and will never be seen again. The website will be inaccessible, and you will not be able to turn for help anywhere if you have transferred any amount. (Believe me, they were also thinking of a police report, so your money has landed in an unreachable country so far)
Since there was no guarantee for your money (as if you were transferring to anyone), the money placed here will be called “tuition fee”.
“Artificial intelligence does everything and already sees where there will be good opportunities”
Any program can only be as intelligent as the one who created it. Although large data sets are handled by machines far far better than anyone would ever handle them, even machines don’t see the future.
While there are Stop-loss options, there are some that are good, but there are some that are not as efficient, and each program has its own “ideal area of operation”. There is one that can perform well in calmer times, there is one that can perform well on more shaky stages.
However, in the absence of adequate human knowledge, there is no such thing as to tell us where any market will move tomorrow. This would be the dream of every trader: he would buy it at a low point and get off the top, then immediately saddle to the low point of another market and start over. Moreover, he would even foresee in which area how much profit is expected, so he would choose only the best.
It is a Holy Grail that does not currently exist. To create this, you would need people who could model the idea reliably with 100% copyability.
What instead? Those who chase the above dream typically get in or out at the wrong time, possibly both.
“Banks are trying to keep it a secret.”
Sounds good, just bleeding from several wounds.
On the one hand, banks are required to inform customers in sufficient depth about their own products. What does the right depth mean? Believe me, far more than the average customer will ever be curious about.
Think about it: if the financial managers of large companies get everything they need from the bank before borrowing millions or just making complex investment decisions, then you probably won’t be an exception either, as far as the flow of information is concerned.
On the other hand, no bank or other financial institution is an information office, nor is it a public educational institution or even a library. Accordingly, don’t even expect them to devote time and energy to informing anyone about a topic that doesn’t concern them. That is, if they do not have e.g. cryptocurrency buying option, they will at most say an opinion (but rather not) but will not inform.
Thirdly, I worked in a bank for 3 years, I can tell from experience that if all the existing information were written in big red letters in front of the entrance, 90% of people would not be interested either.
I saw clients who signed a mortgage agreement (i.e., risked their own house) without reading the merits of what they were signing. There were those who were offended why I wanted us to read it together, it’s just a waste of time.
Based on these, there may be times when the bank “forgets” 1-2 things, but the above sentence usually does not happen in connection with banking products.
It was seen on TV but was immediately taken off the broadcast and has not been available since (but recorded by one of the viewers)
If it’s taken off the broadcast by giving it a dark screen right away, 99.9% of it has no conspiracy-generated secrecy at all, “just” legal requirements.
In order for specific investment advice to sound on TV or anywhere, or just a call to buy XY shares / invest your money here or there, the person who says it needs to have the right professional skills and competencies. It is no coincidence that only low-risk government securities ads and bank deposit ads run every now and then.
Who can say what to whom and how can be told by a central bank decree valid for everyone. If anyone deviates from this, it will specifically go against the regulation.
To understand, he will have a very unpleasant conversation (which can result in more severe penalties) at the supervision. Based on this, don’t be very surprised if the creators of the show do their best immediately to meet this expectation.
Just as I can’t write you to buy any device. I, too, can only give a market overview (what affects what, what are the news in the world), maybe formulate which markets are undervalued, and offer the opportunity to sit down without obligation with a licensed colleague. Even on TV they may communicate information with caution.
Celebrity “XY” also invests his money here, so it’s fixed to be a safe investment.
We cry together, we laugh together. This, in turn, builds on a very strong instinct hidden deep in everybody, which is very difficult to pinch. That’s why it’s so successful. Before you open your wallet as a result of this one sentence, keep in mind the following:
On the one hand, known faces do a lot of work to get rid of articles about them as soon as possible that appeared without their permission. That is, the news may not be true, only someone may have abused their notoriety.
On the other hand, the XY celebrity is not a financial expert, usually not even in the financial field. Based on this, he may also be a victim of fraud. Just as you wouldn’t go to a celebrity who ran as a singer to handle a holey teeth, turn to a knowledgeable person for financial advice.
Thirdly, if the known personality really put there his money, it is his money, measured by his goals and time frame, and of course his willingness to take risks. All this does not mean that it will be the perfect solution for you as well, as your backgrounds are completely different.
To make your investment safe, there are a few pillars you can build on.
Choose a recommended investment device for that time period.
To choose an investment that is safe for you, first define a goal, what you want to achieve with it, and then look for tools to do so.
As you can see in the picture, the higher the risk of a particular investment device, the longer it is recommended. In the longer term, the possibility of losses from exchange rate movements is decreasing.
Your investment will be safer if your chances are not jeopardized by a fall in the price of a poorly chosen asset.
Investment security can be increased if you diversify
While it is promising to take your money in a direction that is likely to be high-yielding, then you also take a completely unnecessary risk. You’ve read about investment diversification before, so here’s a nutshell of why you’re doing well with diversification.
Increasing security
Since you have roughly the same chance of choosing the best as the worst, be more satisfied with the average to avoid losing.
Fulfillment of various goals
What is an investment tool good for one of your goals is completely insane to another even if it has a high return prospect. After all, as you’ve seen above, risk and return go hand in hand. If you choose a tool for your short-term goals that is recommended for the long term, you may lose a lot on it due to exchange rate movements, or your goal may not be met.
Increase security by using the investor triangle
Yield, accessibility, and security form a triangle that you can’t own in the world of investing at the same time. Just like with craftsmen, work cannot be fast, cheap and excellent at the same time, or no food can be delicious, healthy and cheap at the same time.
Of course, you have the option to partially waive one point in favor of another.
You can increase the security of your investment by using the triangle if you put together a portfolio that is appropriate for your life situation but uses different points in the triangle, even for yourself, or even with help.
Seek warranties
For investments, the main goal is not to send statements of nice returns. The most important thing is whether you achieve your goals with it, the statement is at most feedback. Based on this, if you want a safe investment available at a given rate of return, also look at how you get your money back. Currently, there may be several guarantees for this.
The NDIF (National Deposit Insurance Fund)
Although a bank account and a bank deposit are not specifically an investment, a large amount can still be accumulated here. (Eg: received after the sale of an apartment, but not spent on another apartment due to the purchase price).
The amounts deposited in a bank deposit and identified in accordance with the Act on the Prevention of Money Laundering and Terrorist Financing are provided by the NDIF up to a maximum of EUR 100.000.
That is, e.g. if the financial institution could not pay, they will pay up to this amount.
If you are more interested in the activities of the NDIF, you can find a very correctly put together, yet easy to read compass on their pages.
The IPF
The IPF also protects investments up to a limit of EUR 100.000 in the event that it disappears as a result of a crime.
What IPF is not responsible for is a bad investor decision. That is, if you say yes for any reason to an investment or investor decision that is detrimental to you (e.g., to sell). Do not ignore the fact that IPF does not provide the amount invested, but the assets in deposit (in other words, the value calculated at the current exchange rate will be relevant for them) You will also find a very successful article on the operation of IPF, also called a compass, on their site.
But keep one in mind:
Never but never transfer money to an uncontrolled partner based solely on marketing, no matter how much the promise of return.
What can you do if you still have a good (seemingly) opportunity? Try it with a few (maximum 5)% of your total investment. So if you don’t come in, not everything will swim away, it’s just inconvenience. And if the opportunity is stable, you will learn to use it with this 5% and you can add even more later.
Questions:
- Why do you choose to invest?
- How do you align investment security with return opportunities?
- What do you think is the limit that can be reached even in return on a lasting basis even if you are not an insider? (And not even invested in your own business)
You can contact us here with your question and I will be happy to read your post in the social media comment.