There are many options for every choice when it comes to investing your money. From stocks or Forex trading to investing in real estate, there is something for all risk profiles, budgets, and timelines. But this also means that there is a lot to consider before you invest.
here are a few things to consider when formulating your investment strategy –
determine your goals and needs –
The first thing you need to do is determine why you are investing. What’s the end goal? Are you looking to create passive income from dividends and residuals? … or are you saving for retirement or wanting to increase your net worth?
what’s your timeline? –
Once you are clear on what your investment goals and objectives are, it’s time to determine how long you plan to invest. Time frames will impact the level of risk you are able (and willing) to take on.
create a plan –
Although you haven’t yet decided which specific investments interest you, you can still start working on a strategic plan. This will be incredibly helpful to you as you determine which investment products you want to acquire. In most cases, it is good to start off with investments that are low risk and build up to more high-risk products as you become more confident with the investment process.
factor in diversification –
Diversification is imperative for a successful investor. You can learn more about this here. You’ll want to balance out your portfolio with both high risk and low-risk investments so that you are not vulnerable to financial ruin if one of your investments underperforms.
know how hands on you want to be –
This is often an overlooked but important part of investment strategy. It’s important that you know how involved you want to be.
- Do you prefer an investment that won’t require much effort from you?
- Or, are you looking for something whereby you can be hands-on and make investment decisions?
Getting clear on your personal involvement will also help you determine if you want to have someone else handle your investments or if you want to go it alone.
be aware of the fees and costs involved –
Before you get started, you’ll want to have a good understanding of the fees involved.
Ask detailed questions
- Are there recurring fees or monthly charges?
- Will I have to pay each time I buy or sell shares or stock?
- How are dividends paid out?
- Do I owe a commission on my trades?
- What is my tax liability on any potential earnings?
- Can I reinvest profits without additional fees?
As you can see, there is a lot that needs to be considered when determining what investment is right for you. Get as much knowledge as possible, before you get started. If you follow the steps above, you should have no trouble arriving at the perfect investment strategy that fits your financial goals.
*this is a contributor written post