- Get Out Of Your Comfort Zone And Take A Risk
All types of investments come with some level of risk. For example, if you intend to purchase securities like maturity funds, bonds, or stork: it is wise to understand that there is a risk that you will lose part of your money or all of it. Any investment you make in securities is not federally insured, like deposits at NCUA insured credit unions or FDIC insured backs. Investing in securities means that you could lose all the principal amount (the amount you have invested). This is a fact that is true even if you buy the investment through your bank.
However, the returns for taking such risks are greater. In fact, if your financial goal involves long-term objectives, you are more likely to make more money through careful investments in asset categories with high risks such as bonds or stocks. If you restrict your investment to assets with fewer risks, such as cash equivalent, your potential return will be very low. However, if you have short-term financial goals, cash investments are the best form of investment for you. The only problem or concern with those investing in cash investments is inflation risk. Read this article: Kepler Trust Intelligence research for an insight into investing.
- Create Financial Objectives And Goals
Anytime you want to make an investment decision, it is wise to take some time and take an honest look at the entire financial situation. This is particularly important if you have never made any financial planning before. As a matter of fact, it is always wise to come up with an objective and goal when you want to undertake any action or step. Doing this helps a person come up with a plan that will help them achieve the goal.
To be successful in investing, first, you have to identify your goals and risks you are willing to tolerate. Remember, there is no guarantee that you will make money from your investments. However, if you get all the facts about saving and investing; and combine this with intelligent planning, you will be able to gain financial security for years. In a nutshell, you will enjoy the benefits of managing your money.
- Consider Various Investment opportunities
An investor is in a better position to protect himself against significant losses by simply including different asset categories that move up and down under different market conditions. The returns of the well-known asset categories – cash, bonds, and stocks – do not move up and down simultaneously. That is because a specific market condition that makes one asset move up; often makes the other move down. Therefore, if you invest in more than one asset category, you have a better opportunity to reduce the risk of losing money. Furthermore, your overall investment portfolio will run smoother.
Let us not forget how important asset allocation is. That is because it will influence your financial goals. If you do not include enough risk in your portfolio, the investment may not get enough returns that meet your goals. For example, assuming that you are saving for college or retirement (making it a long-term investment goal), many financial advisers will recommend that you include some stock mutual funds in your portfolio.
Some mutual fund companies have begun offering a product known as a Lifecycle Fund. The reason for this product is to house financiers who favor using one asset to save for a specific long-term goal, like retirement. The Lifecycle fund is a diversified mutual fund, which shifts towards a conservative mixture of investments automatically; as it approaches a particular year (identified as target date).
The Lifecycle fund investor will have to choose a fund with the right target date based on their goals. After this, the fund manager will take over and make all decisions regarding diversification, asset allocation, and rebalancing. It is easy to identify a lifecycle fund because they come with a target date. You will get them having names like Target 2045, Retirement Fund 2030, or Portfolio 2045.
- Pay High-Interest Credit Card Debt
Did you know that no investment strategy pays well and comes with less risk, like paying off all high-interest debts? For this reason, if you owe money on high-interest credit cards, it is wise to pay them as quickly as possible under any market condition.
- Always Have An Emergency Fund
A wise investor will create and maintain an emergency fund. They will have enough money in a saving product to cover any emergency like sudden unemployment. In fact, many people have up to 6 months of their income in savings knowing that they can access it when they need it. This way, you will never get stuck or wonder where to get financial aid when you truly need it.
- Take Care When Investing In Individual Stock Or Employer’s Stock
One of the many ways to reduce risks is by diversifying your investment. Remember, never put all your eggs in one basket. This is a saying that applies when it comes to investing. Therefore, always consider choosing the correct group of investments within a category of assets, and you will manage to decrease your losses or reduce investment fluctuations.
If you invest in shares, you will be exposed to significant investment risks, especially individual stock or employer’s stock. That is because if that company or the stock does poorly, you will probably lose more, and you may even end up losing your job. Property is considered the safest form of investment, and bridge lending makes property investment possible.
- Take Advantage Of Dollar-Cost Averaging
Did you know that you can protect yourself from investment risk that has risen from putting all your money at the wrong time by applying a strategy known as Dollar-Cost Averaging? This strategy involves following a consistent pattern of adding new money to an investment over a longer time.
When you make regular investments with the same amount of money every time, you will buy more investments when the price is low and less investment when the price is high. You should consider Dollar-cost averaging as an investment strategy if you are a person who generally makes a lump-sum contribution to an individual retirement account yearly or early April. This is particularly important, especially in an unstable market.
HedgeThink.com is the fund industry’s leading news, research and analysis source for individual and institutional accredited investors and professionals
