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Capital Investment Decisions Worth Contemplating

10 Considerations You Need to Make Before You Invest

Looking to Start Investing? If You've Done Some Research You've Noticed That Investing Requires a Huge Commitment. We Know It Can Be Scary so Before You Take the Leap, Let's Take a Look at 10 Key Factors You Need to Consider.

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In this Article

Investments are a huge decision to make. That’s why we’ve compiled a list of things you should take into consideration before investing your hard-earned cash.

Fact #1: Assess Your Needs & Goals

Take a moment to sit and write down in a notebook or on your computer what you need this money for in the future – or how long it will take before you’ll be able to use this money again.

goals

Fact #2: Consider an Appropriate MIX of Investments

Many people have a tendency to invest in only one type of investment, like investing exclusively in stocks.

It’s important that you diversify your portfolio so that if one part does poorly, the other parts can help balance things out.

investment

Fact #3: Weigh up the Risk vs Reward

It’s important to consider how much risk is involved in order to get to your financial goals.

Evaluate and analyse every possible investment opportunity you have and then weigh up what might be best for you!

risk vs reward

Fact #4:Consider the Time Span of Your Investment

Usually, people are investing in retirement. If that’s your goal, make sure to take a look at the timeline – and how much risk is involved in order to get there.

how long can you invest

Fact #5: Find Your Inner Critic

Be a critic of your investment decision and once you have a well-defined plan for your investment, make sure to be open and honest with yourself. Is the risk worth the potential reward?

Does this investment line up with my goals as well as any other opportunities that might suit me better?

Find Your Inner Critic

Fact #6: Evaluate Your Comfort Zone in Taking on Risk

When investing, it’s not just about the size of your return. It also depends on how much risk is involved in order to get there. If you’re uncomfortable taking risks with your hard-earned money, don’t be afraid to invest only what feels comfortable for you.

taking risk

Fact #7: Maintain a Cash Emergency Fund

It’s important to establish a pot of money as an emergency fund1. This should be enough for you and your family to survive off of, in the event that anything unexpected happens, like being laid off.

emergency fund

Fact #8: Check the Hidden Fees

Look for hidden charges and don’t be afraid to ask questions about what you’re paying for. Remember, it’s your money!

fixed income

Fact #9: Be Diligent About Fraudsters

Avoid circumstances that can lead to fraud and any situations where you could potentially be a victim of a scam. For example avoid responding to an unsolicited email or giving out personal information to strangers.

avoid fraud

Fact #10: Take Advantage of “Free Money”

The average annual contribution to an employer-sponsored retirement plan2 is $14,000 per year. That’s a lot of free money that you’re leaving on the table if your employer matches contributions!

Common Questions

What are the best ways to invest money?

What are the risks of investing?

When should I start investing?

How do diversify my investments for risk management purposes?

In Conclusion

The best investment you can make is in yourself, by improving your skills and knowledge. It’ll help elevate your earning potential, which could help with any loans or debt you may have acquired earlier on in life. Investing time into developing more marketable skills also keeps the option open for taking a different career path if what you are doing now isn’t working out as well as planned. 

References

  • www.sec.gov/investor/pubs/tenthingstoconsider.htm
  • www.moneyadviceservice.org.uk/en/articles/top-tips-for-choosing-investments
  • www.reliancesmartmoney.com/Insights/blog/rsm-articles/2020/01/29/ten-things-to-consider-before-you-make-investing-decisions
  • www.yours.co.uk/life/money/things-to-consider-before-making-an-investment-decision/
  • www.thesimpledollar.com/investing/ten-things-you-need-to-do-before-you-start-investing/

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