Can you design your investment strategies without being Warren Buffett?

Research companies and understand investment products to design your investment strategies and make your money work for you

Warren Buffett is a veteran American businessman and investor known worldwide for having one of the greatest wealth on the planet, thanks to his success in making investments since 1950. Over more than 70 years, Buffett has deployed multiple investment strategies that have taken him to the top of the global economy.

Unfortunately, not all of us have the same knowledge and instinct as Warren Buffett, which doesn't mean you can't design your investment strategies and get a return on your money.

In fact, Buffett himself stated that the most important quality of any good investor is not intelligence, but temperament. That is the ability to manage investments patiently without being alarmed by the constant market and economic fluctuations.

Reactive investment management can divert the focus from investment objectives and result in more losses than gains. However, being temperamental in designing your investment strategies also means not being driven by impulse and being disciplined.

If you are proactive in design your investment strategies, analyse data calmly and study the companies you invest in, you will get valuable bang for your buck.
Warren Buffett himself, perhaps the most prestigious investor of the last century, argues that you don't need to be a rocket scientist to design your investment strategies and generate financial returns.

Below, let's explore some key things to keep in mind when design your investment strategies to lay the groundwork for success.

If there is one quote from Warren Buffett that has gone down in history, it is undoubtedly his statement that the first rule of investing is never to lose money. Behind this simple phrase hides a way of thinking that can help you when you proceed to design your investment strategies: it is important to make smart decisions, based on data and betting on sound investments. Haste is never good when trying to build something valuable. Just as it is dangerous to build a house in a hurry without paying attention to all the keys and details, the same is true when designing your investment strategies. Does this imply that you should always be conservative when investing your money? No, you should be cautious and inform yourself accurately about the product you are going to invest in and the company you are investing in. An investor who loses money is not only not achieving his primary objective, to earn it, but is also undermining his savings. In the realm of great investors like Buffett, losing money is commonplace. Of course, not all bets are equally successful. However, if the investment strategies are sound, the gains will offset the losses. Whereas if you are a small investor, you may decide to design your investment strategies with a focus on rational and more conservative decision-making, betting on products that offer a fixed return and maximum return guarantees, for example, Treasury bills, bonds and debentures, versus more complex and uncertain financial products, such as derivatives. Drive your investments alternating between low and high beams

Only sometimes use high or low beams when you drive at night. It is best to use your high beams if you are alone on the road or in the dark. However, if you come across another vehicle, you should opt for the low beams to not dazzle it.

You can combine short- and long-term products when designing your investment strategies. Both have their advantages and disadvantages.

Short-term investments allow you to recover the money invested and the profitability in a shorter period of time. In such a way, both can be used to reinvest in other products or use them as you see fit. We can find deposits, Treasury bills or alternative financing modalities such as crowdfactoring or crowdlending among the short-term investments.

While long-term investments require more patience and, as we mentioned before, the right temperament to manage investments over time and not fall prey to market changes, it must also be taken into account that during the time the investment lasts, the invested cash will not be available. In return, high yields can be achieved. What products are we talking about? Government bonds, but also corporate bonds, currencies or mutual funds.

For example, when designing your investment strategies, you can decide to invest in a pension fund, i.e. for the very long term, but you can also invest in corporate bonds through Inversa Invoice Market, with a payback period of months. And with an immediate return of the agreed profitability.

Cycling with a fixed gear or changing gears

Precisely, the rates of return are very important when you design your investment strategies. Why? Just as a short- or long-term investment is not the same, obtaining a fixed return differs greatly from a variable return.

In fixed-return investment products, the return of the invested money plus a higher percentage, for example, 5%, is agreed upon. So if you invest 500 euros in an invoice in Inversa Invoice Market, you will receive 525 euros. In the case of our platform, the 25 euros of profitability will be given to you in advance, and the 500 euros you have invested will be reimbursed to you when the drawee pays the invoice. What is the benefit of fixed profitability? There is greater certainty of recovering the investment, and the saver is guaranteed a previously established profit.

On the other hand, in variable income investment products, the investor is not guaranteed the return of the capital invested or a predefined return. Consider, for example, the shares of a company. The investor buys the shares and can sell them for much more money than he acquired them for, but also sell them for less or not sell them at all and earn the dividends associated with them if the company makes a profit. Equities involve accepting a higher risk threshold but also offer the opportunity to earn higher returns than fixed-income investment products.

Given the above, which return should you choose when designing your investment strategies? The one that best suits your needs and objectives. And you can even design your investment strategies by combining fixed-income and equity products. Who said you couldn't invest in SME invoices and buy multinational shares?

Invest in what you know, and bet on real companies

Behaviour, maturity, profitability… What else should you take into account when designing your investment strategies? The characteristics not only of the investment product but also of the company or the state in which you are investing.

When they think of the investment sector, many people imagine complex financial products, which require a great deal of knowledge to understand how they work and whether they correspond to the objectives you set when you design your investment strategies.

Derivative products such as futures, options or warrants are not designed for every investor. However, in these cases, you do need knowledge or specialised advice.

However, the investment industry exceeds the most sophisticated products and investment vehicles. For example, deposits or interest-bearing accounts are investment products everyone uses. The same can be said of Treasury bills. And also the range of products associated with alternative online financing.

On crowdfactoring marketplaces such as Inversa, you can know precisely what you are investing in a bill with a preset return from a real economy company with a given credit rating. Warren Buffett was right; if you invest in easy-to-understand products and tangible companies, you don't need to know aerospace engineering… or finance.

Take advantage of the information age: Research what and who you invest in

As we have just pointed out, at Inversa, you can design your investment strategies by having all the relevant information about the invoices we offer you, the companies that market them and the businesses that have to pay them. But your ability to access valuable data goes far beyond what a bank or an alternative financing platform can tell you. After all, we live in the information age.

When you design your investment strategies, you can consult the Internet for all the data you want about the investment products you intend to acquire and the companies related to the operation. You also have publications and portals specialised in investment and economy at your fingertips to understand the market's state and the companies' characteristics.

The truth is that, nowadays, access to highly specialised and value-added knowledge has been democratised. You can consult all the information you want to design your investment strategies as accurately as possible. Of course, intuition still has its charm, but data has optimised decision-making. Now you can design your investment strategies by deeply analysing what and who you invest in.

As we always say, at Inversa, we believe in people investing in people, and we help them to make their savings profitable.

Design your investment strategies has always been challenging

What conclusion can we draw from the different keys that you must consider to design your investment strategies? First, unlike when Buffett started investing, today's access to the investment market is within reach of anyone.

Without going any further, in Inversa Invoice Market, you can invest only 20 euros from your living room without needing any advice.

The digitalisation of traditional financial institutions and the emergence of FinTech have transformed the ability to access the investment arena and the possibility of managing investments independently.

That's why you can design your investment strategies with complete freedom today, contracting various investment products and putting together an investment portfolio that suits your interests, ideas and objectives.

Not only can Warren Buffett and other great investors implement an ambitious investment plan, but you can also design your investment strategies to make the most of your money and benefit from all the opportunities available to you.