It is never too early to start investing and the younger you start, the better the future looks for you. Setting up a diversified investment portfolio is one of the best financial moves that you can make. You need to consider your long-term investment and immediate investment goals – wealth building is about more than just having an emergency fund and retirement savings in place. You need to consider diversity in terms of both type of investment and investment risk in order to be successful.
What follows are the top investment tips:
The sooner you start saving, the faster your nest egg is going to grow and the more financial freedom you will have in future. Set up an account to save for your retirement and contribute to it every month with automatic contributions. Saving for retirement becomes automatic and your capital and interest compound nicely. And you’ll benefit when it is time to do your tax return.
Retirement accounts are a good saving vehicle but they should not be the only one that you employ. You also need to look at other types of investments like CFDs and other stock-based investments so that you have higher potential returns.
Of course, the higher the potential return is, the higher the risk to your capital is but if you have a well-diversified portfolio and are in it for the long haul, the gains will outstrip the losses overall.
It is when you are young that you have the best chance of recovering from investments that go wrong and, if you truly want to be wealthy, you need to take a few risks to reap the rewards.
With a diversified portfolio, you can choose to keep some money in low-risk, low-return investments such as a treasury bond, some in a more moderate risk account such as managed funds and some in higher risk transactions such as stock transactions to hedge your bets.
Do It Yourself When Possible
Working with a personal broker or investing in a managed fund is the easier way to go but costs more – money that you could be using to build more wealth.
Learning how the stock market works, how derivatives work, etc. can help you make your own decisions when it comes to which products to buy, which calls to make, etc.
There are a lot of firms online that allow you to run your investment account at a fraction of the cost of a traditional investment brokerage house and also provide free training and resources to enable you to do this properly.
It is then up to you to check the market and make decisions based on that – you will just need to weigh up potential gains against transactional costs when buying and selling.
Review Your Strategy and Keep Up to Date
You will need to periodically review your strategy, especially when your life circumstances change. You also need to keep track of developments in the market and how they may affect your investment portfolio. You need to review your progress to ensure that you are still on track in terms of your goals in terms of growth and make adjustments if necessary.
Investments Are a Priority
This is probably the most important piece of advice and one that people often ignore – especially when there is something else that they want to spend money on. Look at your investment money as a fixed expense like your rent or car payment. Build your investment each and every month and make it a priority to do so.