Investing in financial products is a tried and tested way of making money out of money. But as with anything that brings rewards, doing so is not exactly an easy task. First time investors could easily bemoan a number of factors that make picking the right investment a difficult proposition.
Here at Expat & Offshore we seek to assist people with these decisions with detailed information and advice from professionals. To give you some extra guidance to start with, here are ten starter tips on how to make wise investments.
1. Know what you want
This is in many ways the most important tip, to get the most out of an investment you need to know exactly what it is that you want to achieve. Sit down and write down your financial goals, are you after a quick investment that will bring in cash in a speedy timeframe, or are you more interested in a long-term investment that will grow over time?
2. Budget accordingly
It’s all well and good figuring out what you want, but it’s pointless if you do this unrealistically. Make sure you completely establish how much money you can put into the investments, and also how long you wish to invest for.
3. Be aware of cowboy products
As with all industries there will always be people who will try to rip you off, so for this reason always approach investments with caution, and remember the age old adage- if it’s too good to be true then it probably is. This means if someone is offering you an implausibly good product with high returns and minimal risks, then it’s probably a scam.
4. Know your risk
Evaluating your level of risk is also a vital aspect of making sound investments. To ensure you feel comfortable and secure in your decisions establish your risk level and stay within it.
5. Establish your input.
Some people like to have full control over their investment, while others like to put the investment into the hands of a trusted financial adviser. The choice is yours.
6. Know your taxes.
Be aware that your investments may be subject to tax, or at the very least could affect your income tax. Figure out what will affect you and also investigate if there are any tax breaks available.
7. Keep informed
Always be sure that you know the details of what you’re putting your money into. Do research and find out the details and history of the product, including its likely returns and risk.
8. Charges
Find out if there are any charges involved as these could affect your budget plans.
9. Monitor your plan
Check your investment over the duration of its existence and keep an eye on its performance. This way you will be able to make informed adjustments if necessary, avoiding outfalls that may arise if you opt for the “head in the sand” stance.
10. Loss awareness
Don’t confuse paper loss with real loss. Many investments could give an initial loss, but in the long term they could prove to give a good return.