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Module 3 - Part 1/2: Factors to consider before investing

June 16, 2024
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EasyEquities
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EasyEquities

Factors you should consider before investing.

Welcome to the EasyEquities Mentorship program, where we make investing EASY for you!

We have prepared 6 modules that we will post on FinMeUp over the month of July.

The modules are intended to give investors the necessary knowledge to start their investing journeys.

Lets get into it!

The factors that we will be discussing in this module are (The first three will be discussed in this article):
Return
Risk
Investment period
Inflation rate
Tax
Liquidity
Volatility

It is pointless to blindly invest in the stock market.
That is why we have provided our readers with some factors to consider before investing.

Return

Return refers to the income from an investment, namely capital gains, and dividends
Capital gains = asset appreciation in value.
Dividends = Money paid regularly by a company to its shareholders out of its profits.

For example, Thabang purchased 500 shares of Company X for a total of R2 each, therefore costing him R1 000 (R2 x 500 shares = R1 000). Company X does a great job and five years down the line, the shares are now worth R3 each. This means that those shares are now worth R1 500, leaving Thabang with a profit of R500 (R1 500 R1 000)

Risk 

Generally, there is a direct link between risk and return. High-risk investments yield higher returns but could also yield higher losses.
Risk

The amount of risk investors should take depends on things such as their ability to take risk and willingness to take risks.

[Refer to this post to learn more about risk .] https://finmeup.app/post/831d6a03-3ad6-4a9c-af8c-a6f0227250fe

Investment period

The investment period refers to the duration of the investment. The longer the investment period, the fewer chances investors have of losing money and the more chances investors have of making a profit.

The duration will depend on the investors personal needs and goals. We discussed this in the previous module. To figure this out, investors must think about their strategy.

We will discuss the remaining factors tomorrow on the FinMeUp app.

 


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