Investments, small or large, always come in handy irrespective of your motive of investment. You can invest to save for retirement, earn additional income, or even achieve some type of a saving goal.
Here are 10 things that you need to keep in mind before starting any kind of investment
• Emergency funds
Before starting any kind of investment, have an emergency fund backed up for any kind of investment failures. Emergency funds can cushion your fall when your investments go dud.
• Know your comfort zone before taking any kind of financial risk
All investments involve some kind of financial risks. Although, the reward for taking on risks is the possibility of a greater investment return. Long term financial goals are more likely to offer good returns. Investing in stocks, bonds, and mutual funds are subjected to market risks. You may lose some or all your money if the share market takes a hit.
• Consider a mix of investments
By investing in more than one asset category, you might reduce the risk of losing your money and your portfolio’s overall investment returns will be decent enough.
• Chalk out a personal financial road map
Before making any investment decision, sit down and take a look at your financial situation. If you have never made a financial investment before, figure out your financial goals and risk tolerance. You should be able to gain financial security and enjoy the benefits of managing money with an intelligent plan.
• Think twice before investing heavily in individual stocks
That’s right, don’t put all your eggs in one basket. By picking the right group of investment assets, you may be able to put a leash on the losses.
• Pay off high interest debts
Under any market conditions, pay off high interest debts on your cards. It is one of the safest investment strategy that pays off well and helps you maintain your credit score.
• Dollar-cost averaging
The simple technique is, make more investments when its price is low and lesser investments when the price is high. Dollar-cost averaging is an intelligent investment strategy, especially in a volatile market.
• Use “free money” from the employer
If your employer is offering you a retirement plan and you are not contributing enough in it, then you are passing free money for your retirement savings.
• Stay away from investment options that could be fraudulent
Conmen are always there to fish out potential scapegoats that are new in the investment market or who are ambitious enough to root for higher returns in less time. Hence, always try to find unbiased sources before you invest
• Rebalance your portfolio occasionally
Rebalancing means bringing your portfolio back to its original asset allocation. Rebalancing ensures that your portfolio does not overemphasizes only on one category of assets.