There are lots of reasons to invest your money but, before you get started, you need to be clear about what you hope to get back from your investment. Do you want a quick pay out or are you in this for the long term? Consider how much risk you are willing to take and how much money you are willing to lose. All of this will affect the investment that you make. Take a look at my investment tips to ensure the best results:
Plan – Before you get started get keyed up on the basic financial terms, jargon and investment options. IG is a good place to visit for up to date information. Once you’ve established your goals and considered the level of risk you can afford to take then it is time to make an investment plan. If you are a first time investor then starting with a low risk investment such as a Cash ISA is a good basic first move to make or, if you are really unsure, then work with a broker. Remember, the higher the risk the greater the potential reward. Find the right balance in the risk/reward calculation.
Rewards – When investing it’s important to consider how much you ideally want to get back. If you are hoping to get a regular income from your investment then consider investing in annuities, or corporate bond funds. Alternatively, you can put your money into property which should grow in value over time. If you rent it out then you could take a monthly salary from the income you receive.
Spread your cash – Some people might say the best way to make money is to invest in high risk projects but with high risk means you could also potentially be losing a lot of money so seek advice from an independent financial adviser. Another strategy is to spread your money in several different investment types and in different sectors at a time. This strategy is known as diversifying and guards you against falling values in one particular market.
Ethics – Everyone has their own morals and values that they wish to live their life by so this should be same when you are thinking of investing. It is worth doing your research on businesses or companies that you are considering investing in as their values may or may not match yours. There are many green or ethical investments out there, as well as those designed for specific cultural groups or charities. The good news is that ethical investments – such as clean energy or health care – can perform as well as any other type.
Stock watching – The term ‘stock watching’ is used for people who literally check their stocks minute by minute or day by day. Very often people who check their investments too often tend to react too quickly to any changes in prices. This can lead to poorer returns as they buy and sell in a panic, whereas people who leave their shares to grow over time will tend to make more in the long term.