Understanding the basics of investment in capital markets is considered the first step to achieve the investor’s financial goals. Awareness on investment mechanisms makes the investor avoid falling into the risks and enable him/her to choose the best investment decisions. One of the important basics of investment is to realize that invested assets such as shares and different debt instruments that can generate income for the investor and increase its value on the long run. Therefore, residing to saving and investment puts the individual investor in a position where he/she can get the needed money to cover the basic necessities. The investor needs to know that there are no guarantees for profit in investing. Consequently, the value of the invested capital is prone to decrease as it is subject to increase, especially if they were short-term investments. Fortunately, there are many ways to enable the investor to reduce the risk of falling into investment losses, without of course being able to avoid these risks altogether. To be a conscious investor, the investor should learn the following:
- Balancing risk and return.
- Choosing the right investment distribution.
- Diversification when building an investment portfolio.
- Doubling investments.
- Overcoming inflation.
- Monitoring investments.