How to Avoid Debt When Investing

Whilst there are plenty of investors out there who are happy to accrue an amount of debt when starting off (be it down to hubris or confidence), if you’re just getting into trading you’re likely to be fairly debt averse. But you don’t have to get into debt when investing.

If you’ve managed to place yourself in a situation in which you have a large amount of money already, then there’s a huge number of options open for you. You could choose to go into Stock options, binary options, FX trading…just about everything except Spread Betting really. However, lets focus on those that do not have this resource available to them.

If you’re looking to avoid debt when investing, then what you’re really looking for is an investment vehicle with an extremely high potential for returns. Sticking money into FX, or stocks, is good if you happen to have enough capital to deal with the potential risk involved. Those that don’t have enough capital may not be able to spread shares over a varied portfolio, increasing their chances of making a loss.

Penny stocks are something to consider but you can only win if you are lucky enough to invest in a penny-stock that happens to go massive, but it’s not so great if you have a small amount of starting funds and the speculative nature of penny-stocks doesn’t appeal to you. In that case, your best option is probably Binary Options.

Binary Options are an odd choice to be suggesting you put your money into, and they certainly have a very mixed reputation, but hear me out. If you’re looking to avoid debt when investing, then the fact that binary options have predetermined risk whilst still having an incredibly high potential return on investment makes them the perfect choice. Some binary option platforms ensure that traders keep a percentage of their investment, even in the scenario that the trade was unsuccessful. This in many ways prevents the all or nothing nature of trading, giving the trader the opportunity to bounce back with some remaining capital.

Binary Options have, in the past, been associated with people wanting to ‘get rich quick’ – and their subsequent disappointment. As with any sort of investment, going into it blind is a great way to lose your investment. If, however, you go into Binary Options trading having done a great deal of research, then even with a small amount of money available to you, you can make some great returns.

I can’t over emphasize how important research is, in order to gain a crystal clear picture of how to invest your money. Binary Options should be used as a way to create yourself enough of a base to move onto other forms of investment, and as such it is crucial to get your first few investments right. Before you even think about choosing a broker, know everything there is to know about Binary Options, the market you’re investing in, anything that might make a big difference to the market, and the specific commodity that you’re investing in.

It is still very possible that you will lose a very large portion of your investment. That is just the reality of investing – it’s a high risk, high reward business, and doing so with a relatively small financial buffer and without allowing yourself to go into debt makes it even more difficult. But if you can, it’s worth it to successfully build yourself a good financial base with which to continue trading without risking all of your money.

As with any trading, a person should set themselves a limit of money they are willing to spend on investing. They should never use borrowed money or money they simply don’t have in order to get themselves back into black. Traders often set up separate trading accounts away from their current accounts to ensure they stay out of debt. In my opinion, to succeed in the trading business money must be thought about in a strategic manner, traders must not over extend themselves, putting themselves at risk. The most successful traders in all forms keep a level headed temperament, only using capital they can genuinely afford to risk.

1 thought on “How to Avoid Debt When Investing

Comments are closed.