Getting Started in Investment

Investment will seem like an attractive option for increasing return on your capital, particularly when interest rates on savings accounts are so low.

Whether you’re wanting to invest yourself, or for someone to invest your money on your behalf, there are several factors you should consider before you begin.

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How much can you afford to invest?

It is important to recognize that when you begin investing your money you may introduce an element of risk to your capital. Typically the higher the potential for return the higher the risk to your capital, therefore don’t be sucked in by high rates however consider carefully how the investment would sit with your attitude to risk.

Before you begin investing you should make sure that you finances are in order and that you are not investing with money that you can afford to risk losing. for example, will you be able to pay all your debts easily? Do you have a buffer of savings to fall back on? Many experts recommend that you have the equivalent of a minimum of three months wages to fall back on in case of hard times.

 

Why are you investing ?

Before deciding on the right investment option for you, you must have some sort of financial goal in mind. Are you looking to generate an income from your investment, or just to increase your capital?

Set a time frame within that you can realistically achieve your financial goals, and decide on how long you’re willing to commit your capital in order to achieve your desired returns. This will help you to find the correct kind of investment for you. If you have goals in mind, you can easily tell when they do not live up to or exceed your expectations.

 

Diversification

Investment almost inevitably comes with an element of risk, however by diversifying your investments you can reduce risk. investing in areas of assets that have little in common means that if one area fail it won’t take your full investment down with it. you can diversify your investments by putting money into different companies, markets, assets or types of investment.

Source: ezinearticles