Money from money or systematic construction of the wallet?

Everything in this text has been prepared on the basis of either own experience or observations and conversations with people who invest / speculate with their money. Money from money or systematic wallet building - what is the title of this entry about? Well, about the approach to money management, but not those that are already on account with the brokerbut those that are yet to go there.

The first transfer to a brokerage account comes from the money we could:

• to receive from someone,
• win,
• earn yourself,
• set aside in advance as savings.

Multiplication of money

With this approach, we make a paid, received, pre-paid amount to the account, with the idea that we will make more money out of this money. So we know that the current money will be enough for the work you are doing, and on the broker's account, the surplus transferred is due to our investment / speculation that the cash balance will increase. In summary, for X months / years we work to have savings, and then we wonder what to do with these savings (or this money from someone we got). If a decision is made about speculation on the market, whether regulated or unregulated, then the goal is to make money out of money, and this is best done as soon as possible.

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Such an approach has a very big disadvantage in the form of the fact that at the same time a substantial amount of cash can land on the brokerage account, which we are not ready to manage in an active manner, and changes in the bill, whether plus or minus, can cause extreme emotional states inexperienced speculators / investors, then driving into the vicious circle of making irrational decisions. The market of rather captives does not take and in the absence of mastery such an investment adventure may end badly.

Systematic construction of the portfolio

An alternative to the above approach, recommended for less experienced people, is the systematic construction of a portfolio or account. This can be compared to the stock market, where, for example, for a monthly surplus, e.g. 1000 zł We systematically build our portfolio every month by buying a block of shares. 

Thus, for example, for work performed, receiving remuneration, part of it is regularly allocated to savings and / or investments every month. The same can be done on CFD market, where instead of saving a total of PLN 10 for 10 months and paying in full, you can regularly invest PLN 000 on speculation every month.

Why can this method be more beneficial? Well, starting from a relatively small amount, which is regularly increased, we are getting used to both gradually increasing transaction volumes and to profits / losses. Gradually entering the world of investment is not like a cold bucket, but as a kind of process. Thanks to such an approach, firstly, it is easier to withdraw and, for example, after 3 or 6 months, say that actively managing your own financial surpluses is not for me, and secondly, if this is what you want to do, you get used to regularly that systematically the portfolio is growing and the size of the transaction also, which should not favor much more control and more rational decision making.

And how did you manage your funds before the funds hit the broker's account?