There is a lot of information about investing in the print media and the cyberspace — and sometimes it can be overwhelming. Yes, your friends and family can advise you, and you may have your thoughts on this subject. However, staying informed goes a long way toward ensuring your investments meet your financial goals. With that in mind, here are the top investing tips that most experts typically recommend.
Review your goals and needs
Take the time to figure out what you expect from your investments. Knowing yourself, your goals and needs, and your ability to handle risks is a good way to start. So, fill a money fact find to help you start out.
Understand how long you can invest
Another top investing tip is to ask yourself how soon you want to get your money back. The time frames vary according to your goals, and they will also affect the type of risks that you encounter. Wesley Edens, an investment specialist, advises that:
- When saving for a house with the hope of buying a house in a span of two years, investments won’t be suitable for you because their values fluctuate. So, you need to choose the cash savings accounts instead
- If you’re saving money for your pension in 30 years time, ignore the short-term drops in your investment values and focus on the long-term results. Over an extended period, investments tend to give you a better opportunity to beat inflation and achieve your pension goals
Make a plan for investment
Once you have known your goals and needs and have determined how much risk you can handle, it is time to draw your investment plans. Doing this will help you to identify the kind of products to go for.
Diversify
One basic investment rule to enhance your probability of better returns for your investment is to accept more risk. A good way to manage and improve the balance between your returns and risks is to put your money into different types and sectors of investments whose prices differ. This is called diversification. It will help to smooth out your investment returns while the investment is still growing. It also reduces the total risk in your portfolio.
Determine how hands-on you can be
Investments can consume too much or too little of your time as you chose. If you would like to be hands-on and enjoy your investment decision making, consider buying individual shares — especially if they offer high dividends. However, ensure that you understand the risks.
If you lack the time or inclination to be hands-on, or only have a small amount of money for investing, a good choice is investment funds such as Exchange Traded Funds, Open-Ended Investment Companies (OEICs), and unit trusts. These pool your money with that of many other investors and use it to purchase a broad range of investments
Check the charges
When you buy investments such as individual shares directly, you will have to use the services of a stock broker and pay dealing services. If you opt for investment funds, they also have charges such as paying the funds manager. And if you need financial advice, you will have to pay the adviser. Those charges vary from one provider to another, so ask your providers to explain all of their charges.
Investing may seem like an obscure art, but if you follow the sound advice found in these top investing tips, you will understand how to go about making your investment plans and finally landing right investment deals.
Photo Credit: 401(K) 2013
Money Beagle says
Trying to invest like the pros is a solid way to make money, but the pros don’t want you to invest like them because then they wouldn’t have your money to take.
Jayson says
Now I know the secrets of the experts. It feels like nothing can stop me from being like them in the future and I would like to do diversification. Thanks for the tips Len.
Erick Brunet says
Thank you for sharing the article. It’s very useful. Hope to hear more from you.
bill says
Diversification is not new. You can even find it in the recorded words of Solomon. Add to it the old saying of “Don’t put all your eggs in the same basket.”.
I don’t understand why people don’t get it.
Len Penzo says
Yep; it’s almost common sense.
John Rocks says
no one cared about your money as much as you do!