Investing Made Simple: A Quick Checklist for Beginners

Risk Assessment

•  Yes, I am ok with the risk!: Assess your ability and willingness to withstand market fluctuations and potential losses. Determine your financial situation’s ability to handle losses without impacting your lifestyle. If you struggle with risk management, do not miss our blog about it. 
• Questions to ask yourself: What will change if I lose this money? Is it worth the risk considering the potential gains? Can I get similar performance with lower risk elsewhere? How will I react if I am losing 20%, 30%, 50%, 80%…100%? 

Planning & Strategy

•  I have defined an Investment Horizon and goals: Clarify the time frame for your investments (short-term vs. long-term) and adjust your strategy accordingly. Set clear, measurable financial objectives, such as retirement, education funding, or purchasing a home. 
• Questions to ask yourself: Do I know how and when this money will be spent? Is it a meaningful purpose for me? Do I understand all details about the investment? 

Portfolio Management

•  It will contribute to my asset allocation and diversification: Ensure your portfolio is diversified across various assets and sectors to mitigate risks. Create a strategic plan that aligns with your risk tolerance and financial goals. Learn more about Portfolio diversification here. 
• Questions to ask yourself: Is this investment contributing to my portfolio diversification in terms of country / company / currency / industry sector? How much this investment will impact my overall net wealth? 

Costs, Fees and Taxes

•  I understand related Fees, Expenses, and Taxes: Review and calculate management fees, trading commissions, and any other costs associated with your investments. Consider the tax implications of your investments, including capital gains taxes, and how they affect overall returns.
• Questions to ask yourself: Is it clear all the fees related to my investment? Is it worth it? Have you compare it to similar products? How fees and taxes will impact my net performance? 

Research & Analysis

•  I conducted a Market Research and analyzed economic conditions: Perform thorough research, including fundamental and technical analysis, on potential investment.  Keep abreast of macroeconomic factors like interest rates, inflation, and geopolitical events that may impact markets.
• Questions to ask yourself: What are the head/tail winds that could impact my investment? Would it be better to wait for better / more clear investment conditions? 

Behavioral Awareness

•  I am able to recognize my behavior biases and the market sentiment: Be aware of emotional biases (e.g., overconfidence, herd behavior) that may influence your investment decisions. Stay rational and analytical rather than reacting impulsively to market movements.
• Questions to ask yourself: Am I buying too expensive? Are we in a market bubble? Is it everybody talking about it? 

Liquidity & Rebalancing

•  I have assessed my liquidity needs: Evaluate your short-term (6 to 12 months ahead) cash flow requirements and ensure you have accessible funds for emergencies or special expenses. 
• Questions to ask yourself:  Do I have enough cash to cover my needs after making this investment? Will I be forced to sell it in advanced if something unexpected happens? 

Final points

•  My partner / family is aware and aligned with me:  Consult your partner and family about the investment you are about to make. 
•   Professional Advice checked: Consult with a financial advisor or investment professional for expert guidance rather than relying solely on informal sources or if you do not feel confident with the knowledge you have about the topic. Consider the your knowledge, experience, investment amount, liability, and risk.  
• Questions to ask yourself: Is my partner / family aligned with the investment? Do I need to seek for professional support? Do I have any liabililty risk?