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Source: Original article written by Gaelle Haag from Capitana

Investing is accessible to everyone if you are well prepared and we have developed a platform to make access to investing even easier and more tailored to your needs. However, as with anything, you increase your chances of success by by being clear about your financial situation and setting concrete goals. Here are some questions to ask yourself before you start investing.

1. Why do you want to invest?

Before talking about returns, performance or gains, ask yourself what the purpose of the investment is. Why invest? What future project can be achieved with your investment? When do you want this project to happen?

Do you find it difficult to plan ahead? You don't have any specific plans? Start by making your savings grow by protecting them from inflation and thus preserving your purchasing power. 

2. How much can you invest?

Before you start investing, make sure you have your emergency fund (3 to 6 months of "essential" expenses), a safety cushion for the hard times.

Once your emergency fund has been built up, any surplus savings (and I mean savings, not deferred expenditure) are investable.

Are you struggling to save regularly or would you like to get a better handle on your budget to make more money? There are plenty of personal finance accounts hosted by women who offer advice on how to build and manage your budget. We really like the content of Ninafinance for example, which will help you to manage your finances well, in order to free up/increase your savings capacity.

First of all, you have to build your personal budget, determine the essential expenses from the pleasure expenses 🤑. Essential expenses are the expenses you cannot escape (rent, insurance, mutual insurance, electricity, etc. ) these expenses should ideally not exceed 50% (even if according to some cities rents can make this rule complicated to achieve). 30% of your income should be spent on "pleasure" expenses, such as holidays, outings and hobbies. Finally, the remaining 20% should be allocated to savings and investment.

Download our free template to take stock of your budget in a few minutes 😉

3. What risks are you prepared to take?

Your risk profile is very important. It varies according to your age (older, less risk on your investments), your investment horizon (shorter investment horizon, financial assets less exposed to risk) and of course your personal risk appetite. The aim is not to avoid risk, but to manage it and exercise that risk tolerance muscle. The return is the compensation for the risk taken.

A trick to give you an idea of how much risk you can afford to take in your long-term investments (e.g. retirement) is to deduct your age from 100. This will give you the share of equities, an approximation of the share of risk, that you can aim for in your portfolio. For example, if you are 25 years old, you can invest 75% of your portfolio in equities and 25% in bonds if you are investing for your retirement. If you are 60 years old then your percentage of equities would be a maximum of 40%, and 60% in bonds. This is a simplistic rule, but it gives you an initial basis to guide your allocation.

As a reminder, historically, equities are riskier than bonds because they are more volatile. 

4. When is the right time to invest?

The best time to start is today (if your emergency fund is set up). Do not try to "time the market", i.e. try to determine the best time to enter the market. Even professionals cannot predict with certainty how markets will develop in the short term. 

The most robust long-term strategy is to invest regularly and systematically. This allows you to invest through market cycles. It also allows you to buy more when prices are low and less when prices are high and thus "smooth out" prices over time. This strategy is called "dollar cost averaging" or DCA in the English financial literature.

5. How do you want to invest?

The choice of platform is very important, as it is what will really "get you started". The most important criterion for choosing an investment platform is that you are comfortable with it! Some platforms are more intuitive and ergonomic than others and this will be different for everyone. You will have to compare the costs of each of them and hunt for hidden fees!

Investing on your own? 🧐

Most investment platforms are run-only (DIY), which means that you will not be advised and it is up to you to build and manage your portfolio, which can be intimidating when starting out. That's why, before you become more comfortable with investing, you can start with small amounts. E-Toro, Boursorama, Revolutare fairly reputable and easy platforms to start with.

Before committing yourself, do not hesitate to check that the company is not a fraudulent platform and that it is well regulated. You can check on the AMF website for France, the CSSF for Luxembourg or the FSMA for Belgium.

If you don't want to go it alone, there are platforms like Capitana 🌫️ accompany you and invest for you!

Delegate the management of your investments? 🧐

Choosing to delegate management to professionals may seem inaccessible and reserved for the very wealthy. Personalised delegated management is reserved for private bankers or asset managers. Most of the time, bankers in branches are not trained to advise clients on investments and will favour internal products that do not necessarily meet your needs.

There is another solution: choose a managed platform that will build you an investment portfolio in line with your risk profile and objectives.

If you are also looking to invest in line with your values and measure the impact of your investments, then Capitana is the ideal platform to accompany you. Capitana is about portfolios built for you, tracking the impact metrics you care about and educational content to help you ask yourself the right questions 😉

We hope that this short guide has been useful to you and will help you to take the first step or, if you are already investing, to better manage your investments.