An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Below are some essential investment tips.
Review your needs and goals – It’s well worth taking the time to think about what you really want from your investments. Knowing yourself, your needs and goals.
Consider how long you can invest – Think about how soon you need to get your money back. Time frames vary for different goals and will affect the type of risks you can take on.
Make an investment plan – Once you’re clear on your needs and goals – and have assessed how much risk you can take,draw up an investment plan.This will help you identify the types of product that could be suitable for you.
Diversify – It’s a basic rule of investing that to improve your chance of a better return you have to accept more risk. But you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don’t necessarily move in the same direction.
Decide how hands on to be – Investing can take up as much or as little of your time as you’d like. If you want to be hands-on and enjoy making investment decisions, you might want to consider buying individual shares – but make sure you understand the risks.
Check the charges – If you buy investments, like individual shares, direct, you will need to use a stockbroking service and pay dealing charges. If you decide on investment funds, there are charges, for example to pay the fund manager. And, if you get financial advice, you will pay the adviser for this. Whether you’re looking at stockbrokers, investment funds or advisers, the charges vary from one firm to another. Ask any firm to explain all their charges so you know what you will pay, before committing your money.
Investments to avoid – Avoid high risk products unless you fully understand their specific risks and are happy to take them on. Only consider higher risk products once you have built up money in low and medium risk investments.