Investing can offer amazing opportunities for financial growth, but it’s not without risk. Before you commit to an investment strategy, you need to have clear financial goals. That means knowing what you want to invest in, how long you want to invest for, and what level of risk you are prepared to take in order to reach your desired returns. Here are a few things you will need to consider.
1 – Your Objective
Why are you investing? This should be the starting point for any conversation about investing. Investing can help with short-term goals such as saving to buy your first house or start your first business. It can also help you achieve more long-term goals such as saving for retirement or putting your children through university. As long as your finances are in order and you have enough money to enjoy your day-to-day life, putting aside a little money to invest can be a sensible way to grow your wealth, plan for the future, and get what you want in life.
2 – Your Initial Deposit
Once you decided which goal you want to work towards, the next thing to consider is the amount of money you want to invest, and the performance rates you want to achieve. Your initial deposit can, to an extent, determine what investment options are available to you. That said, some financial service providers will let you sign up for portfolio management services with a smaller deposit. This means you can start sooner and then add more funds as you go.
3 – Your Timeframe
When are you likely to want to reach this goal? Are you thinking five years? Ten years? Thirty years? Your timeframe is likely to affect the way you invest. For example, a young person planning for their retirement may wish to consider a portfolio that includes riskier asset classes such as equities, commodities and currencies that can offer higher potential for return. This is because any losses can be recovered in the long run. However, a middle-aged person who is closer to retirement may want to take a more risk-adverse approach to investing. This could mean investing in less volatile asset classes or choosing a portfolio that minimises risk exposure whilst still offering consistent returns.
4 – Your Risk Tolerance
Nobody likes to risk money. That said, some investors have a higher risk tolerance than others and are more willing to potentially lose some of their money in return for the chance of generating a higher profit. Before you invest, you need to have a long talk with your portfolio manager about the risks associated with an investment product, and the potential returns associated with that level of risk. That way you can be sure that a product is right for you.
5 – Your Level Of Involvement
It may be the case that you have the knowledge and experience needed to choose your own investments. However, if you are new to finance or you are someone with a busy schedule, you may find it hard to keep up with what is going on in the markets. In this case it might be worth considering opting for a portfolio management service. Letting someone else handle your investments can save you time and energy. It can also help you ensure that you are investing in suitable assets. Portfolio managers are qualified professionals, with high levels of expertise, and more resources at their disposal. As such, they are in an excellent position to help you invest wisely.
Investing can you help you build your wealth and create a better life for yourself. It can also help your achieve your long-term personal and financial goals. For more information about our investing services, feel free to contact us or check out our portfolios.