FROM THE EDITOR

I AM not sure how many young people will heed my investment advice, seeing it is a characteristic of young people to believe they already know everything, but here goes.

Know the difference between trading and investing. While it’s okay to do both, it’s not okay to do trading in the mistaken belief that you are investing.

Trading in shares, cryptocurrencies, forex or contracts for difference (CFDs) is a short-term, high-risk activity that can be likened to gambling. It may get the adrenaline pumping through your veins but, over longer periods you are unlikely to make money. In fact, you’re highly likely to lose it. If you enjoy the excitement it brings, do it by all means, but go into it well informed and know the risks – and do it only with money you can afford to lose.

The term “investing” is often used to refer to trading, but it should be exclusively used for long-term investing: regularly contributing to an investment such as a unit trust or exchange-traded fund and enjoying the sure, compounding growth of that investment over the years – the longer, the better.

In my Money Basics feature, I explain that, while it may take a while, investing 10% of your salary into a long-term equity investment will stand you in good stead by the time you’re in your 50s. And if, in addition, you always preserve your retirement savings when changing jobs, you can achieve financial freedom at a relatively young age.

Take the road less travelled: consider your future in the financial decisions you make today.

Martin Hesse