How to Choose Suitable Financial Products

It can often be challenging to choose financial products best suited to your investor profile. There are so many options, some more complicated than others, that such a structure may seem overwhelming at first glance. Considering that, this article provides the most important factors to keep in mind when investing in different financial products within Gate.io - coupled with examples of our current offerings.

What Are Financial Products?

Financial products can be described as any formalized structure of investment offerings that an organization deals with - whether that is a crypto exchange, a local bank, a Decentralized Autonomous Organization, or even a neighbor. If an investment offer follows a guided framework previously established and consolidated, then it is a financial product.

Here are a few examples of widely known financial products: savings accounts, mortgages, credit cards, loans, a currency exchange, derivatives, securities, and so on.

However, there is a conceptual difference between financial products and financial instruments - although both can still be considered products. A spot trading platform, for instance, is a financial instrument; it means you are actively utilizing tools that depend on your actions, rather than investing in fixed structures such as financial products. Although both fall under the umbrella of financial products in practice, it’s important to understand this distinction when discussing investments with people that work in the sector.

Know Your Risk Appetite

That is an essential step an investor must take before proceeding with financial products; how much risk are you willing to have to fulfill your investment goals? What makes riskier financial products more attractive is, of course, their upside potential - which also comes with its downside parallel. For instance, spot trading, and particularly leveraged trading, offers investors in the cryptocurrency market enormous prospects, but it also carries the burden of active responsibility and great care for your decisions.

Therefore, it is important to ask yourself some questions to establish a clear pathway ahead; how much am I looking to earn from a financial product? Is it an attainable goal? If looking into financial instruments, do I have the necessary knowledge to use them? And, of course, what are the risks involved? Clarity on investments is one of the most important skills someone can carry through life.

Understand Your Time Frame for Earnings

Source: Just ETF

As a common rule of thumb used in financial education, the younger people are, the more prone they are to invest in riskier financial products. As a person ages, the focus shifts from making large earnings to a stable income and eventually protecting their already-acquired wealth. So what is your time frame for investments? If you are looking to rapidly increase your earnings while understanding its risks, then spot trading, futures, options, and margin trading may be the tools for you. But if you are looking to earn profits slowly but surely through a fixed product structure in the long term, then financial products such as staking and Cloud Mining might be the ones for you.

Even when knowing one’s risk appetite and understanding the time frame for investment goals, an investor must still consider how they will interact with the markets.

Are You an Active or Passive Investor?

While active investors are fond of more financial instruments to use as products, such as trading, passive investors naturally take the more casual approach. That does not necessarily mean that one is better than the other, as results still rely on the same factors - knowledge, experience and patience. Due to new financial products that have arisen over the past decade, investors can also combine the best of both worlds for their choices. One example of that is copy trading, where popular active investors within a platform can have their trading investment routine followed and copied passively by other investors.

It’s also vital to know your level of knowledge in finance; after all, financial investments without the proper research and understanding of how the function of the assets may as well be traditional gambling. One example of that is to compare the use of structured products or crypto lending. While the former requires a dedicated amount of work and understanding of derivatives and timed financial contracts, the latter is much more straightforward - you lend your crypto assets and get a fixed interest rate in return.

Again, being a passive or active investor usually has little to do with results and more with your profile and personal interests. The crypto market is a great example of that, where growth is driven not only by novel technology and innovative assets but by an active community behind them who enjoy participating and contributing to the ecosystem.

Conclusion

In conclusion, the best path for choosing suitable financial products is to look inward. Understand your profile as an investor, from risk appetite to an active or passive investment style, and then look for the best financial products from there. Making a transparent and logical assessment of how you function as an investor is one of the most beneficial things someone can do at the start of a new investment journey. It will save you plenty of time, stress, and corrections in the long run. Much like our professional lives, hobbies, and social relationships, we all function in different ways when it comes to safeguarding our earnings into investments. Take the time to find your own, research the options and you won’t be disappointed.

When it comes to crypto financial products, Gate.io is certainly the way to go. The platform is a one-stop shop and has the most thorough and unique crypto products structure in the market, with offerings ranging from simple spot trading to bot trading, NFT launchpad, over-the-counter trading and institutional-grade services for the most demanding of investors. Whatever your suitable financial products are, you will most certainly find them here.