Investing is about using your money to work for you and increase your earning potential.
Whether it is to save for retirement, purchase a home, plan for a child’s college fund, or perhaps it is to enjoy life more. There are several factors that you should weigh before making an investment decision, such as:
Financial Assessment
Finances in Order – Do you have an accurate budget in place? Having a working budget will give you the correct information when deciding how much money is available for you to invest. Within the budget, it is wise to create an emergency fund. The emergency fund is 3 to 6 months’ worth of expenses that is in an account that is easily accessible. Just in case the unimaginable happens you are prepared.
Costs of Investing – Set a budget for your investment, the amount of money needed to begin investing will depend on the type of stocks you are looking into.
Define a Timeline
Defining your goals is a key determining factor when deciding the investment plan. Are your goals to see quick growth or are you able to see your investment grow over time.
Risk Acceptance
Formulating a plan will help determine how much risk you are willing to take when investing. Investments that carry a bigger risk often offer a higher potential for return. A portfolio that contains a combination of high and lower risk investments tends to work to the investors’ advantage. Is your end goal short term or long term? The goal will define the risk as a long-term goal that can mean lower risk investment as the timeline is longer.
Choosing Investments
What type of investments will become part of your portfolio? There are many different accounts that you can use for your investments.
Once you are at this step in the progression of preparing to invest than it may be advisable to find the right financial adviser or broker. Several factors should be considered; reputation, performance, communication, and what additional services they can offer. Remember that there are unscrupulous investment professionals who may not have your interests in mind, do your due diligence in the process.
The most important step in the process is to do your research before investing in anything. Getting verification of the company, the key players within the company, pending litigation and many other factors to avoid investment scams.
Avoid Investment Scams
The lack of reporting requirements makes it impossible for an individual to determine if an opportunity is legitimate or a fraud. Many individuals believe that only high-level investments are at risk. However, any opportunity for creating wealth can be a fraudulent scheme. Conducting due diligence is vital when beginning and throughout the investment process. This will ensure that you are able to avoid investment scams. Nevertheless, the best way to ensure that you are protected against fraud is to find an investment research agency. They will provide new investors with quality research and help protect them against investment scams.
