When I first moved out of my parent's home, I was so excited. I had a lovely flat and a great job, but I quickly realised I knew nothing about the financial world. I'm not talking about stock investing or anything like that, but I am talking about finance basics. So, this is why I have created my blog. I want to teach others about budgeting, different types of bank accounts, savings and personal loans. Finance does not have to be boring, especially when you get something you want at the end of it. So, if you desire a brand new car or a trip overseas, these blog posts will help you manage your money, so you reach that goal sooner rather than later.
Each person who intends to invest in any venture needs to ask himself or herself some crucial questions whose answers will form the basis of taking on or rejecting an investment opportunity. This article discusses some of those important questions that you should ask yourself when you want to make an investment.
How Will I Lose Money?
The first duty of any investor is to protect the money that he or she intends to channel into any investment vehicle. The best way to protect that money is to know the avenues through which you may lose it. This information will help you to find ways to manage those risks as much as possible so that you increase your chances of benefiting from that investment.
For example, the mismanagement of a publicly traded company can cause shareholders to lose their investment in case the company gets negative publicity as the managers are investigated by regulatory bodies for misconduct. A wise investor can manage this risk by doing due diligence about the quality of the managers of a company whose shares he or she intends to buy.
Is It Right For Me?
Investment opportunities abound in each industry. However, not all opportunities are suitable for each individual. For example, it is unwise to invest in an opportunity, such as forex trading, which requires your active involvement in case you can't have the time to be an active participant in that venture. Similarly, it may not be wise for you to invest in high-risk ventures when you are just a few years away from retirement. Your entire investment can be wiped out and you will be unable to retire with the income that you thought you would have.
The best investments are those opportunities that can help you to attain your personal objectives. The investments should also suit your risk tolerance profile and skill-set.
When Will I Get Out?
It is hard for you to find an investment opportunity that will be right for you and make business sense indefinitely. You should therefore define the conditions that make an investment appropriate for you at that time in your life. Any change in those conditions should prompt you to exit that investment. For example, you can decide how much downward price movement you are willing to take in the stocks that you buy before you sell them off and channel those resources to another venture. Never invest when you lack an exit strategy.
Due diligence is just one aspect of successful investing. Hire an experienced investment advisor who will equip you with all the other components of a successful investor so that you increase your chances of attaining your life and investment goals.
Share26 February 2018
