Smart money moves: Tips for new investors from a financial expert

by Tanvir Awan
Published: Updated:
Orient Finance's Managing Director Seraj Asad Khan

In an insightful exploration of the financial landscape, Orient Finance’s Managing Director Seraj Asad Khan, shares invaluable advice on navigating the complexities of financial markets, embracing the transformative role of artificial intelligence (AI), and addressing the rising prominence of cryptocurrencies.

As financial caution prevails among new investors, the expert in an interview with Dubai Newsweek sheds light on striking the delicate balance between risk and reward, offering practical tips for effective wealth accumulation.

The interview not only underscores the importance of financial education in today’s dynamic market but also delves into the key principles individuals should follow for long-term financial security. Drawing from extensive experience, he highlights common pitfalls to avoid in the world of investments, providing a roadmap for success.

Moreover, the discussion goes beyond individual strategies, exploring how financial institutions can contribute to inclusive financial services, ensuring access to wealth creation opportunities across diverse segments of society.

Q: For someone new to financial markets, what advice would you give to help them understand the basics and make informed investment decisions?

In my opinion, for those venturing into financial markets, building a solid foundation in financial education is paramount. Understanding key concepts such as risk, diversification and various asset classes is pivotal for navigating the intricacies of the market. Despite the allure of potential gains, starting with modest and manageable funds is an ideal strategy for budding investors rather than steering clear of large investments in pursuit of huge returns.

The key benefit of making small investments helps to gain practical experience, fostering a gradual increase in market exposure as your confidence and knowledge grow. Additionally, staying informed on market trends, economic indicators and global events is an important step that empowers investors to make well-informed decisions throughout their financial journey.

Q: As AI plays a growing role in the financial industry, how do you see it affecting the everyday person’s personal finances, and what should they be aware of?

In today’s world, artificial intelligence (AI) has become pervasive across all industries, with a prominent role in the financial sector. Individuals actively participating in the financial market must be aware of the transformative impact of AI, including its benefits and potential risks.

Even though AI-driven tools have the capacity to provide bespoke financial advice, automate investment processes and elevate decision-making efficiency; investors should maintain a vigilant stance on data security and a nuanced understanding of the algorithms underpinning AI recommendations. Regularly reviewing and reassessing automated strategies becomes a crucial practice, ensuring continual alignment with individual financial goals in this dynamic landscape.

Q: Many people are cautious about investing due to perceived risks. How can individuals strike a balance between risk and reward when considering investment options?

Investing, particularly in the financial markets, is like a playing on a seesaw, it requires balance between two sides. Similarly, to retain in financial markets, maintaining a nuanced balance between risk and reward is paramount. This balancing strategy is highly personalised, which should be curated after considering individual financial goals, time horizons, and risk tolerances.

Effectively navigating this balancing act reflects a person’s grasp of the fundamental principles governing the financial market. It is also pivotal to be realistic about one’s risk tolerance, steering away from investments that could jeopardize financial stability while actively seeking opportunities for growth.

This tailored strategy underscores the importance of aligning investment decisions with a clear understanding of personal preferences and requirements in the dynamic landscape of financial markets.

Q: What practical tips or strategies would you recommend for the average person looking to grow their wealth through simple and effective investment practices?

In order to grow wealth, investors should begin their efforts with the foundational steps of setting clear financial goals, establishing a budget and consistently saving a portion of income.

By leveraging tax-efficient investment options and exploring low-cost, diversified index funds, investors can pursue a straightforward and effective path towards wealth accumulation.

The key lies in regularly reassessing financial goals and adjusting investment strategies, further ensuring alignment with evolving priorities and market dynamics. By following this proactive approach, investors cannot only elevate the potential for returns but also contribute to sustained progress in building their financial portfolio.

Q: In your view, how important is financial education for the general public, and what steps can individuals take to enhance their financial literacy?

As we have discussed, financial literacy is paramount in order to survive in this dynamic market. Individuals can rely on courses, workshops and reputable online resources to elevate their knowledge in this field.

Additionally, acquiring practical knowledge in steps, such as creating a budget, comprehending the power of compounding and staying informed on financial regulations, are integral components of this journey.

Financial literacy serves as a powerful tool, empowering individuals to make informed decisions, strategically plan for the future and navigate the complexities of the financial landscape. By acquiring a solid understanding of financial principles, individuals can elevate skills necessary to manage their resources effectively and work towards achieving their long-term financial objectives.

Q: With the rise of cryptocurrencies, how do you see them fitting into a traditional investment portfolio, and what considerations should someone keep in mind when exploring this new asset class?

Diversifying your investment portfolio is a clever move in this field and cryptocurrencies are a worthwhile option for it, but one should be highly cautious about the unprecedented market fluctuations. Considering their inherent volatility, it is advisable to allocate only a small percentage of the overall portfolio to cryptocurrencies. According to my opinion, conducting thorough research, gaining an understanding of the technology and staying vigilant about regulatory developments are essential steps in navigating this space.

While cryptocurrencies can contribute to diversification, it is crucial to view them as complementary investment rather than replacements for traditional investment assets. Integrating cryptocurrencies within an investment portfolio is a smart strategy, but one should acknowledge their distinctive characteristics in the broader financial landscape before making any decisions.

Q: What are some key principles individuals should follow in terms of savings and investments to secure their financial future, especially in a changing economic landscape?

One of the fundamental principles for achieving financial security is cultivating a habit of consistent saving, even if the amount is small, it can bring great benefits in long run. Establishing emergency funds to cover unforeseen expenses and making strategic investments aligned with long-term goals are also integral components of wealth creation.

Simialry, another key step is regularly reviewing and adjusting financial plans in response to changes in economic conditions, as it ensures maintaining ongoing financial security. These proactive strategies, coupled with prudent investments, help establish a resilient financial foundation.

Q: What are some common pitfalls or mistakes that individuals should be aware of and avoid when entering the world of investments?

While entering the vast financial market, investors must be highly cautious to identify and steer away from common pitfalls to achieve long-term success. According to me, some of the common mistakes include, emotional decision-making, which often leads to impulsive actions and chasing short-term market trends that may result in missed opportunities or substantial losses.

Similarly, neglecting diversification can expose your investment portfolio to unnecessary vulnerability. Overleveraging or investing with borrowed money can also magnify losses and heighten financial risks.

The cornerstone of any successful investment is patience, steadfast long-term perspective and disciplined risk management and by adhering to these principles, investors can seamlessly navigate potential pitfalls and build a resilient investment strategy.

Q: How can financial institutions contribute to making financial services more inclusive, ensuring that a broader segment of society has access to opportunities for wealth creation?

Financial institutions play a pivotal role in fostering financial inclusion through various strategic measures, such as offering accessible and affordable financial products. Additionally, financial education programs and leveraging technology contribute to empowering individuals with the knowledge needed to make informed financial decisions.

Simplifying account opening processes and providing tailored products are essential steps that widen access to wealth creation opportunities across diverse segments of society.

For instance, at Orient Finance, the introduction of Demo trading accounts is a testament to our commitment to boosting trading capabilities and facilitating strategy development. This tool is accessible through mobile apps and web browsers. With a substantial account value of USD 25,000, firms are empowered with sufficient virtual fund to experiment and enhance their trading abilities.

Our comprehensive technical analysis helps them explore risk management solutions and technologies crucial for real trading scenarios.

Q: For someone looking to invest, what factors should they consider when deciding between long-term and short-term investment options, and how does this decision impact their financial goals?

While choosing between long-term and short-term investments, investors must diligently evaluate their financial circumstances and factors like financial goals, time horizon and risk tolerance.

On one hand, long-term investments, such as retirement accounts, gain advantages from the compounding effect over time, contributing to sustained growth. On the other hand, short-term investments may be apt for immediate financial goals, but they typically come with higher risk.

The key element in this decision is aligning the investment strategy with individual objectives and adopting a diversified approach that strikes a balance between addressing short-term requirements and fostering long-term wealth growth. This approach ensures that investments provide a robust financial security.

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