5 Steps to Becoming a Smart Investor

Today, investing wisely is more important than ever. But how do you know where to start? A guide to smart investing for beginners

In times of economic uncertainty, it’s understandable that people may fear getting started in the stock market and other investments. But is not investing now actually a smart move for your financial future?

Investing always carries risk there are no guarantees in life, and there’s just no way around that fact. However, smart investors know that there are always good investment opportunities to be found, no matter what’s happening in the markets. Consider this your roadmap to smarter investing!

Practise investing risk-free with a trading simulator try it now:


Play the long game

“Time, not timing” is probably one of the most important principles in investing. Beginner investors tend to fret over the best time to “take the leap” but the truth is, finding the right time to start investing isn’t nearly as important as how long you stay invested. In fact, the sooner the better, since that will allow your investments more time and opportunity to appreciate (particularly when investing in emerging markets) and to recover from bumps along the way. 

Studies have shown time and again that staying the course with long-term investing — through market highs and lows — is far more likely to be profitable than pulling out in a panic. And the longer your investment time frame, the greater the chances for positive returns so get started as early on in life as you can.

Expect the unexpected

No one has an investment crystal ball (wouldn’t that be great?) but one thing any seasoned investor will tell you is that there definitely will be turbulent times. No one can predict when those times will occur, but we do know that declines are just naturally part of any economic cycle. Of course, we’d all like to avoid losses, but too much fear of them can keep you on the sidelines, missing out on not only the pain, but also the possible gain. 

Although there are no guarantees, historically, downturns have been followed by an eventual upswing. Risk management is certainly smart but trying too hard to avoid any loss at all could itself be the most risky investment decision of all.

Don’t put all your eggs in one basket

Speaking of risk management, diversification is one of the top strategies for any investor, especially beginners, to adopt. Simply put, diversification means that you spread your investment capital over a variety of assets, so that your money is never riding all on just one. That way, if say one or two of the stocks in your portfolio happen to take a turn for the worse, there are other assets there to help balance things out. Diversification is even more important during periods of high inflation and rising interest rates. 

Explore your options

The need to invest your money wisely is greater than ever, and this often requires looking beyond the obvious. The good news is that more asset classes and investment options are available than ever before. You’ll want to look at both active and passive long-term investment options, bearing in mind all of the points mentioned above. 

A great option to consider is eToro’s Smart Portfolios. Created by a team of experts, each of these ready-made portfolios has its own investment strategy based around a particular market theme. Beginners may find Smart Portfolios to be just what they are looking for, since they are a convenient and diversified way to access major market innovations and trends shaping our world today, without paying portfolio management fees which many brokerages charge.

Smart portfolios also utilise what is known as dynamic asset allocation, which combines active and passive approaches to offer the best of both. The composition of the portfolio including which assets are in it and in what percentage are reevaluated from time to time in response to what is happening in the markets. All of this is automatically done for you, based on expert analysis and research, and without any additional charge.

Explore Smart Portfolios

Go with what you know (and always be learning too)

Each of us as unique individuals bring our own personal agendas and beliefs to every choice we make. Investment decisions are no different, and in fact, investing in the companies, products, and trends you believe in can be a great way to build a portfolio.

Warren Buffett, arguably one of the world’s foremost investors, famously said: “Invest  in what you know.” It’s pretty good advice, considering that one of the most common mistakes that beginning investors can make is getting involved in investments that they don’t know enough about.

Here too, Smart Portfolios can help pave the way for beginners. You can choose from dozens of portfolios each built around an industry or trend that you are already familiar with, for example, electric vehicles, cybersecurity, high fashion or finance. This is known as thematic investing, bundling together assets in a way that is similar to how many exchange-traded funds (ETFs) work in fact, more investors are interested in trends rather than a single asset, and are putting their money in thematic ETFs more than any other type. Research shows that although they comprise less than 2% of assets, thematic ETFs account for 6% of revenues and have taken in more flows over the past three years than all other sector ETFs combined.

And, finally, always be actively enhancing your financial knowledge, which will allow you to make better investment decisions. Check out eToro’s free Trading Academy, a valuable resource for courses, videos, tutorials, and more.

Getting started

One of the best ways for beginners to dip their feet into the world of investing is with a no-risk, no commitment demo account. Use the $100,000 virtual portfolio to hone your trading skills and get the confidence to make the right investment choices for you. See what it’s like to invest in Smart Portfolios and other assets in real time. Then, when you’re ready, you can easily switch to real trading.


This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.