If you think you are ready to start taking tentative steps into the investment world, there are a few things you need to ask yourself. Before adding your first investment to your portfolio, make sure you have addressed these key questions.
How much can you afford to invest?
Whatever area you want to invest in, you must decide exactly how much money you have to spare. Never overstretch yourself. Investment is, in essence, a gamble. It is something to be done with money that you could afford to lose if everything went wrong. You should also consider the length of time you will invest for. Every good investment plan should have an exit strategy.
What do you want to achieve?
There are two ways of looking at investment. You may want to make a serious living from investing, or just create a well-filled pot for the future. Both these examples require different tactics, but both need a clear plan if you want to them to succeed.
Do I need a financial adviser?
If you are a beginner with no financial experience, then hiring a professional advisor is a good investment in itself. An advisor may cost you a small part of your growth, but can save you from exceptionally costly mistakes. Even if you are confident in your abilities, it is best to have a professional eye on things to mitigate risks. The markets can change due to the most obscure of reasons, and knowing when to hold your nerve or call it a day is a skill that takes experience.
What’s the best investment if I decide to go it alone?
Traditionally, the housing market has always been a safe place to put your money, but as we have seen in recent years; nothing is guaranteed. However, there isn’t a successful investor alive that doesn’t have property high up on their portfolio list. Your best bet is to look for affordable houses for sale in up and coming areas. It can be hard to predict, but you can limit your risk buy buying cheap and putting some money aside to redecorate and repair. You can then sell it on for a quick return, or play the longer game by letting it out.
Do quick returns exist?
Yes, but they are rare and almost impossible to predict. It takes a lot of work and experience to sniff out the quick capital growth investments and experts are paid a lot of money to find them. And they tend to keep quiet about them, too. In general, if it sounds too good to be true, it almost certainly is.
Should I get a stockbroker?
A stockbroker or funding manager is a good idea if you are starting out as they can help you with the day to day running of your portfolio. They can also give you tips and advice on investments and tax breaks. If you are thinking of getting a stockbroker, make sure they are approved by the relevant financial authority in the area you are investing in. There is a good guide to financial regulators over at Investopedia.
Investment can bring great rewards, but it is important to understand that every investment is a risk. Always seek out professional advice before injecting your money into any area.
[Image credit – OTA Photos]