Deciding whether investment is right for you can be difficult – and it’s not a decision that should be taken lightly. There is the potential to earn large rewards, but these rewards don’t come without risk.

Your investment strategy should be unique to you and your financial circumstances, but we’ve put together some key things to think about when considering investing your hard earned money:

1.  Set financial goals

Any successful investment strategy should be founded on clear financial goals – why are you looking to invest your money in the first place?

The goals you set will determine the type of investment that’s right for you. For example, if you’re looking to save for retirement, a pension may be the most suitable form of investment for you.

Your financial goals should be split between short, medium and long term goals, and your investment strategy should be built around each of them. Your goals should be written down, and referred to each time you need to make a decision pertaining to your investments. This will ensure every decision you make is on track with the end goal you’re looking to achieve.

You can use these goals as a benchmark, continually reviewing your progress towards them and adjusting your strategy when appropriate.

2.  Diversification

When you’re first starting out with investment, it’s important not to put all of your funds in one place. Investing little and often can be more rewarding than investing in larger, lump sums.

Diversification can help you to spread your investment’s financial risk. It doesn’t guarantee against money loss, but it can be a key technique to help you reach your long-term investment goals as it can help to mitigate the effects of market fluctuation and inflation on your individual investments.

3.  Understand risk

Investments have the potential to secure long-term financial returns, providing you with a regular income that contributes to your secure financial future. However, every investment – no matter how small – comes with a level of risk.

Understanding your risk tolerance – the level of risk you’re prepared to and can afford to take – is a critical starting point. Often, people will overestimate their risk tolerance, so it’s important to ask yourself – how would you feel if you lost a portion, or even all, of the money you’re investing?

4.  Regularly review your investments

Making the decision to invest your money is just the start of the process. It’s a long-term process, and you will need to check in every so often to review your investments, financial goals and risk tolerance – as these will all change over time.

You can adjust your investments as you go, but it’s important to recognise that the value of your investments will fluctuate over time, so try not to make too many changes too quickly. It can take time to reach the level of return you’re looking for.  

5.  Stick to your investment strategy

Try to avoid reacting to short-term market trends. Your investment strategy is built around achieving long-term financial rewards, so it’s the long-term market trends and macroeconomic factors you’re interested in when it comes to making investment decisions.

Your plan is there to guide you – centred around your individual financial goals.

 

For support in creating an investment strategy that’s right for you and your individual financial circumstances, get in touch or call 0121 285 8528.

Disclaimer: The purpose of this blog is to provide generic information and should not be interpreted as a personal recommendation or advice.

Disclaimer: Whateley Wealth Management is not responsible for any external site content.

Disclaimer: The value of investments can fall as well as rise. You may get back less than you invested.

 

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