Investments are the new savings! There is a good reason why you shouldn’t leave your hard-earned money inactive in a bank account. Saving it won’t increase it but, the right investments can. However, without proper research and analysis, an investment is nothing more than a gamble. So, now the question you must be asking is: What adds the prefix of “right” to an “investment”?
To answer that, we have compiled a list of five factors that should be considered while going through investment options, they are:
- The time of investment
There are numerous ways to invest and earn. For example:- Fixed deposits, Gold, Silver, mutual funds, real estate, etc. However, the right investment includes estimating the perfect time for the purchase of assets to make the most of them. A right investment that happens at the wrong time would limit your profits, and thus, would be a wrong investment. For instance, most mutual funds’ investors withdraw when the market hits a low, and fearing a loss, they pull out their investments.
However, market savvy investors would ask you to do quite the opposite. They say the best time to put your money in equities is when the equity market isn’t performing well. Why is that? So when the market starts rising, your profits will be much higher than what they would have been if you invested at the peak of the cycle.
- What is the objective of the investor?
The investor must possess a clear picture of his objectives. If you are investing for a secured retirement, with a little more cash than what you have earned, then your portfolio has a low-risk appetite and needs stable assets. Investments in stocks won’t help you, as they depend on market fluctuations.
You might try a safer option like life insurance coverage, or real estate. Investment in physical assets is on the cards for you. Physical precious metals such as Gold are an evergreen investment, which will eventually come to your rescue during a crisis. However, what matters here is where you buy it from! We recommend you only trust esteemed companies such as Gold Bullion Australia for your precious metal investments.
If you can take moderate risks with your money, then you could try getting into a stable company’s stocks. Please note that for moderate and low-risk investment tools, the returns aren’t extraordinary. If you are looking at astounding returns, you may need to have a high-risk appetite in your investment portfolio.
If you are ready to take aggressive risks, then you should try investing your money in the stocks of a growing but promising company. It takes time for a company to grow and strengthen itself; therefore, you must have the patience to withstand all the ups and downs that come with such investments.
- The age of the investor
Youngsters, who are earning a decent amount, can chase aggressive growth. They also shoulder fewer responsibilities as compared to adults. Therefore, if you are in your 20s, you should explore new grounds for investments that suit you best. If you are middle-aged, and aiming to secure your retirement, then you should prefer a safer route and choose stability over an asset that promises high returns but could lend you in a risky spot.
- When do you need your money back?
You should be well-aware and accepting of the withdrawal terms attached to every asset class before investing your life-long earnings into them. What good would it be if you invest your money in something that won’t let you have your money at the time you need it the most? Therefore, analyse the near-future needs that might confront you, before investing. Some companies charge a behemoth amount in taxes if you wish to withdraw your money during the holding period.
- How much risk can the investor tolerate?
Investment initiates a minor business. You must keep in mind that in business, there always exist risk factors. Moreover, a higher risk possesses the potential for higher returns. Thus, if your personality can handle the high ups and downs of the stock market, only then should you choose them as your subject of investment. If not, choose a safer mode to invest in like bonds or FD.
We hope you take your investment matters as the utmost priority and choose the best option out there for your portfolio. Happy investing!
