10 concepts you need to know as a (micro) investor

The Internet is teeming with articles about investing and lists of vocabulary that every investor should know. But if you're interested in real estate investing, you don't need a thick dictionary of investment terms to hand. To understand the basics, our today's article should be richly enough for you.
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Investment Portfolio

The investment portfolio is a summary of all your investments. Whether it is real estate, gold or stocks. We divide our portfolios into conservative, progressive and dynamic. What's the difference between them? That conservative is pretty safe, investing in such a portolium should just cover inflation for you. A progressive portfolio is such a golden mean, and dynamic portfolios mean riskier investments, but also higher profits. You can also build your portfolio from real estate investments, for example in different regions. It's up to you what strategy you try. Think about diversification!
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What is diversification and why should you be interested?

Often inflected, keyword. Investing smartly does not mean betting all your savings on one horse. It is best to divide the money between different investments. If you enjoy the gains from investing in real estate, explore which locations are highest in, but invest elsewhere as well. Surely you still remember how during the first lockdown the operation of accommodation facilities was prohibited. A large proportion of the 14,000 Prague apartments rented on Airbnb have diluted the housing supply and driven down the price of rents in Prague by thousands. Those who bet only on Prague have had a hard time. Those who had investments in other cities, too, where rent didn't get cheaper, could applaud each other. This is called real estate portfolio diversification in practice!
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Risk and its hedging

Even if there is some risk associated with every investment, investing in real estate is perceived as safe in the long run. In the portfolio of almost every millionaire you will discover some interesting buildings. Why not — real estate offers a stable rental income, unless something dramatic is brewing on the market. The real estate market has shaken considerably, for example, during the crisis of 2008-2009. Since then, prices have risen again.

And what does hedging mean? It's nice to imagine it in context with other investments. When a bond or a poorly selected stock falls, it is possible that you will end up with zero. It's not that hot for real estate, nor do big crises usually cause prices to drop drastically. You can always sell your property, even at a loss. But your money is still secured by something real, tangible.

I want to try microinvesting
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Investment horizon

The investment horizon is the period for which you planned the investment. It can be a year or two, but also a decade. At Investown, we work with an investment horizon of 12-60 months.
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Return on investment and appreciation

Return of investment, ROI or return on investment, is a number that indicates the net gain or net loss against the initial investment. The result is always a percentage by which you can clearly see whether your investment is paying off or not (the calculation is based on minus). How to calculate? Put the following data into the sample:

Return on investment = ((net profit — initial investment)/initial investment) * 100 [%]

Investown platform offers real estate investing with at least 7% per year. This means that if you make a one-time investment of, for example, 5,000, you have 5,700 CZK at the end of the investment period (which is, say, 2 years). In the case of an investment of 50 000 CZK then you have the amount 57,000 CZK and so on. In addition, if you reinvest the profits from the investments that go into your Investown wallet each month into other investment opportunities, you can far exceed these amounts.

And how to calculate the return on long-term investments? Use a little more complex calculation IRR (Internal Revenue Percentage), which we have shown in our The Patera of Responsible (Micro) Investing.
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Inflation

We look at inflation in almost every one of our articles, because it is related to investment. According to the Czech National Bank, the average inflation rate in 2021 was 3.8%, and the CNB predicts 13.1% for the whole year 2022. This year's abnormally high inflation rate is due to events in the world, including the war in Ukraine. It assumes its early calming and return to normal values. In 2023, inflation is set to fall to 4.1%.
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Liquidity

High liquidity of an investment means you can market it It's easy to sell, but it's also easy to buy. We have looked at this topic before when we imagined Different Types of Real Estate Investing. Some investments are easy to monetize, while others are not as easy and fast. And this is what you need to take into account when planning an investment. Think about whether you can save money for some time, or if you need it quickly in your hands. At Investown, liquidity is high. During the investment period, it is possible to offer the investment to other users and monetize it.
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REIT

A Real Estate Investment Trust, a so-called REIT, is a limited liability company that invests in real estate. You can invest in it by buying its shares. These companies are popular mainly in the US and they always manage their own real estate portfolio. With the purchase of REIT shares, you can look forward to paying dividends on a regular basis, but you will not miss out on trading the stock market. But be prepared for your investment to be exposed to stock market fluctuations.
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Micro-investing

We understand microinvesting as an opportunity to fully invest even with small amounts in the order of hundreds to thousands of crowns. For example, at Investown we are close to microinvesting, you can invest with us from 500 CZK per month. You can choose from a range of investment opportunities in different cities and Diversify your real estate portfolio. Liquidity is high with us, because you can sell your investment at any time and get the money back into the account. Investment horizon You choose according to which property you invest in, but you can also shorten it to yourself if you sell the investment early. Oh, thanks Profits starting at an attractive 7% per year you protect your money from inflation and get closer to your financial goals.