5 Things you need to consider when investing.

Does it seem you have less time to make enough money for the lifestyle you desire? Am sure you strive to make your ideal future a reality. Whether it is traveling around the world or early retirement. You first earn money, save and then invest. According to BEA (2021) the US has recorded 20.5% increase in personal savings. Read more about saving from the blog on 6 best places to save your money – Finstock Evarsity Resources. Once you save, you may turn to stocks, bonds and other areas so as to invest and make money.

There are several areas where you may invest but before you invest here are 6 things you need to consider when investing.

1.Invest on what you understand.

Just because everyone is investing in it does not mean you need to also invest. You need to do your research and invest on what you understand. Make sure you are able to explain the investment to yourself. You may end up losing money because you never understood an investment that someone told you about. Learn more about investment by registering for the course CONTEMPORARY PRACTICES IN IMPACT INVESTING (CPII) – PHILANTHROPY – FINSTOCK EVARSITY COLLEGE.

2.Diversify your investments

Different investments have different levels of risk. Some are high risk for example stocks while others are low risk like money market funds. Learn more about stocks by registering for the course BASICS IN STOCK MARKET INVESTMENT (SMI) – BUSINESS AND STRATEGIC MANAGEMENT – FINSTOCK EVARSITY COLLEGE.  There are other investments that are medium risk for example balanced funds offered by insurance companies. Minimize risk by investing in different assets.

3.Understand your risk tolerance

Different people have different risk tolerance. Risk tolerance is the amount of risk you are willing and able to take. The risk tolerance may be high, medium or low risk tolerance. If you are of high-risk tolerance, you are willing and able to invest a large amount of money in an asset that is of high risk for example stocks. If you have low risk tolerance you are willing to invest only in low risk tolerance. Understanding your risk tolerance enables you to choose assets that are aligned to you. Learn more about risk management by registering for the course BASICS IN RISK MANAGEMENT (FRBRM) – FREE COURSES – FINSTOCK EVARSITY COLLEGE.

4.Have an investment that is aligned to your goals.

It is a good habit to have goals. When choosing an asset make sure you have a reason for investing in the asset. If for example you have a goal of buying land in 5 years’ time. You will choose an asset that is able to grow the money for the 5 years. Then you are able to conveniently withdraw after the 5 years.

5.Have an emergency fund

You can never be sure of what will happen tomorrow. As you invest make sure you invest in money you can afford to lose. Also prepare yourself for any emergency that may be forthcoming because emergencies are inevitable.

 

 

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