Investing Decisions: What You Need To Know

The 10 Things to Consider Before You Make Investing Decisions

Investing is a huge part of life, but it can be really confusing. There are many different types of investments and you have to make the right decision for your situation. It's important to do research before you make any decisions so that you know what will happen if things go wrong.

10 Things to Consider Before You Make Investing Decisions
In this Article

Fact #1: An Assessment of Your Needs and Goals Is the Best Way to Make a Decision

Sit down with some paper, write out 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.

Assessment of Your Needs

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.

Mix of Investments

Fact #3: Investing Isn’t Always About the Size of Your Return, Weigh up the Risk vs Reward

It’s also important to consider how much risk is involved in order to get there. Evaluate and analyze every possible investment opportunity you have, then weigh up what might be best for you!

Weigh Up Risk and Reward

Fact #4: Consider How Long You Can Invest

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 Your Invest

Fact #5: Be a Critic of Your Investment Decision

Once you have a well-defined plan for your investment, make sure to be open and honest with yourself. Is the risk worth it? Does this investment line up with my goals as well as any other opportunities that might suit me better?

Investment Decision

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.

Evaluate Your Comfort Zone

Fact #7: Establish and Maintain a Cash Emergency Fund

It’s important to have a small pot of money as an emergency fund. This should be enough for you and your family in the event that anything unexpected happens, like being laid off or paying medical bills.

Maintain Emergency Fund

Fact #8: Check the Charges and Fees

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

Charges and Fees

Fact #9: Avoid Circumstances That Can Lead to Fraud

Be sure to avoid any situations where you could potentially be a victim of fraud, such as responding to an unsolicited email or giving out personal information in public.

Avoid Fraud

Fact #10: Take Advantage of “Free Money” From Employer

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

Free Money From Employer

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 improving your skills and knowledge because it will help to improve 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. 

Resources

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

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