Investments-Keeping it simple

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Investing can be a simple process, providing you understand what you are investing in. I’m not suggesting you need a degree in maths or be some kind of financial genius, but my experience when dealing with people who are having problems with their investments is  usually that they didn’t understand what they were investing in. If you don’t understand an investment you have it will be impossible to know whether it’s helping you reach your personal goals.

When looking at investing you should consider the following:

Your investment objective

You may want to place your capital in a safe place where you can access it easily and where it will not lose its value. Or you might want to grow it quickly and are not worried about the risk, two very different objectives that are compatible with a variety of investment types, or maybe a mix. Consider what you are looking to achieve and then take advice on the best investment types to do this for you.

Your age

If you invest when you are young you are able to wait longer for your investment to give a good return. Plus, you don’t have as many responsibilities when you are younger which means you will have more disposable income. This means you will be able to invest in things that although may be riskier will have a lot more potential for big returns.

When investing at middle age and thinking about retirement you should invest the most you can so that you can afford to live comfortably during your retirement. It is also a good idea to invest in the safer options at this stage of your life.

Your risk tolerance

All types of investments come with a risk level. For example, savings accounts are very low risk but so are the returns. Investing in different businesses can produce very profitable returns or lose you a lot of money so tend to be high risk. Mutual fund portfolios are made up from a number of different companies so the risk is spread. If the thought of losing money stresses you out forget about investing in any high risk investment strategy.

Your knowledge of investing

It takes a lot of time to gain the knowledge needed to understand about investments. Unless you have the time to learn we would always advise speaking to a financial adviser about investing. This is when you can ask questions and have any investment recommendations explained to you in detail to ensure you fully understand.