Getting started with investing

The 5 Steps to Successful Investing – All You Need to Know

September 9, 2022
3 min read

Why Investing Matters

Maybe you have a savings account and think that putting in a little every month can build up in the long run. Unfortunately, that’s not the case. Saving money is important, but you won’t reach the same earning potential as you could by investing, let alone investing successfully.

Investing is an effective way to put your money to work and potentially build wealth. Yes, that’s right, you don’t have to work for money but can make money work for you. When you’re able to invest in smart ways, you can make money on your money, achieve independence, and unlock opportunities out of your reach.

That’s because of a little something called the power of compounding. Compounding is when an investment makes enough earnings or dividends that you can then reinvest. It’s basically when your investments make money to let you reinvest to make more money. Something your savings account could never do.

And that’s where Peccala’s comes in: we want to enable people without in-depth financial literacy to reach their full potential or have greater certainty beyond their current income and wealth.

Cryptos were conceived so that people could exchange currencies without institutional intermediaries and thus may be the ideal instrument to achieve these goals.

Successful investing doesn’t have to be so daunting, and we’ve broken it down into five fundamental steps.

The 5 Steps to Succeed in Your Investing Journey

As cliche as it may sound, you have to take risks if you want to win in life. You’ll hear all the self-made business people say it and for good reason. Consider any situation in life, one where you were unsure if you should take that leap or not. If you never take it, you’ll never know the outcome. And if you do, it could pay off in the long run. This could’ve been anything, diving into the deep end of a swimming pool. Riding a bike without training wheels. Telling someone you loved them. Taking that job that maybe didn’t have the highest salary but you felt had potential. Whatever the case, something told you just to trust your gut and leave your comfort zone. 

Investing is the same. Relying on the possibility that an event may or may not occur in the future, however likely it may be, carries risks. But some of these risks can be mitigated or faced with the right attitude.

So even though Peccala will be working for you, we want you to have the awareness and confidence needed to embark on this journey together and feel in control of your money, always.

1. Define your goal

If you’ve ever heard of Simon Sinek, then you may have heard of (or even read) his book Start with Why. That’s because, with any kind of goal setting, you could consider starting with why. Why do you want to invest? What’re you trying to achieve? What’s your ultimate goal?

Take this time to carefully consider what you want to achieve and even break them down into smaller goals to ensure you can accomplish them. Make sure to write down why it’s valuable and important to you. Set a motivational value statement to keep you on track. 

With a clear vision, you’ll be able to create a better path to achieve that success. It kind of works like any framework in life to better guide you. Consider what it’ll cost you or what sacrifices you might have to make. When you have this all clear in your mind, then you’ll be better motivated. It can also help you when you face challenging times. As you may know, the financial system is a living and breathing organism that evolves and changes daily. Being adaptable and pivoting your goal in a way that’s still achievable will help you stay on a sustainable path. 

Even if taking a roller coaster ride on the stock market will have its ups and down since it involves risks, it’s still one of the best ways to achieve your long-term goals. So whatever they may be: a new house, a new car, a medical treatment, that long overdue vacation in the Maldives. Whatever you ultimately want, make sure to set a goal, keep it in mind and follow through.

2. Set a realistic path

It’s time for a plan of action. Your purpose gives you a time frame. Taking this, your goal, and your starting amount (plus what you can save over time) into account, you can get an idea of which is the best investment instrument for you, what degree of risk you’re willing to take, and see what parts you truly control and can feel most comfortable with. Then, with all this in mind, you’ll be able to make a realistic, sustainable plan. 

By writing out the steps you need or detailing your progress, you’ll better set yourself up for success. In this case, it would be essential to select a given amount you want to invest. 

Especially if you’re a first-timer, we recommend a small amount or one you won’t be too worried about losing. Take this time to get familiar with investing, our algorithms, and the fluctuation in the market. Like anything in life, getting a feel for it and how it’ll develop takes a while. That's why Peccala requires a low minimum investment.

Once you understand some financial trends better or how they work in general, you’ll probably feel comfortable investing more and even reinvesting.

3. Make investing a habit

Habits account for about 40% of our behaviors on any given day. At least, according to research by Duke University. And new, strong habits are essential to improving your overall life. However, just like breaking old, bad habits, starting a new one might not be easy. We recommend starting with a tiny habit.

For example, let’s say you want to start investing $250 a month. The nice thing about digitization and automation is you can just set up your bank account to automatically transfer $250 as soon as you get your paycheck. You’ll never see the money, so you won’t even realize it’s gone, but you can already start making this a consistent habit. Consistency is key to creating and maintaining any habit.
Once you start seeing returns, you can then start investing more monthly or even consider taking out some of your cash flow and reinvesting it to make even more. This won’t happen overnight, and it’ll take time, but once you feel comfortable and get a sense of buying and selling, it’ll come as natural to you as breathing. Or at least close enough to it.

Especially in the medium- and long-term, you must consider your investment as some form of training or studies. This will require perseverance and application –  just if you started going to the gym or a new university program –  but the result will be a better version of you and a possibly richer you too.

By setting an action plan from step two, you’ll be able to stick to a pace you can sustain and carry on for the long term. If you fall back, no worries. The best way to get back on track is to see how and why you lost track, fix it, and then get back as quickly as possible. 

4. Be self-disciplined

The path will be full of uncertainties, and there’ll be no shortage of difficult moments, primarily due to unpredictable situations. After all, the financial market is volatile. So make sure to keep a cool head, control your emotions and try to act rationality. Maintaining focus will ensure your investments are as successful as possible rather than going off on panic buying or selling, for instance.

Currently, you’re hearing a lot about recession and bear markets, and you might even think it’s not the best time to invest. However, investing in a bear market has its advantages. A set of objective parameters and a clear long-term vision of how to properly take action in the event of a bear market will set you up for success. Prices are better now, especially for first-time investors. Low-cost funds are currently available that can help you prosper over the long term. So, in the end, set your goals and be in it for the long haul. And you’ll see how your patience and diligence will pay off. 

5. Find the right support

After taking these steps, you might need a little help from friends. Or a partner. Whoever you ask, make sure that you pre-screen for the 4 C’s: competence, care, character, and consistency.

With competence, it’s about understanding if this person has the skills and knowledge for you to trust their opinions and recommendations. Make sure you’re getting solid advice if you’re choosing to seek it. Someone with a proven trading or financial background would already be very beneficial.

Ask yourself if this person has your best interest at heart with care. Do they care about your wellbeing and overall success? It would go along the lines of their character. Make sure this person has a solid moral compass that won’t compromise your trust.

Last but not least, remember consistency. Will this person be a reliable presence that’s always available to you? For any support system, you want to ensure you find the right fit and share an understanding of your goals to take the action steps needed to meet them ultimately. The right support system can take you a long way.

As an African proverb goes,

“If you want to go fast, go alone. If you want to go far, go together.”

Investing can be an emotional journey, and so ensuring a long-term perspective in a disciplined way can lead the way to more successful investing. Be sure to make regular contributions, build a new habit of investing and get the support you need (if needed) to get you on a path to financial freedom.