Are you one of the many who wants to invest but don’t know how to start or go about doing it? Investment may sound hard, but it doesn’t have to be complicated! All you need is to build up your knowledge and you are on your way to make make more money, beat inflation and guarantee your future financial stability.
Take a look at your current financial situation and figure out how much of your salary or savings you can allocate to investing. First, start off by creating a Google Sheet (a viable Microsoft Excel alternative) and record all of your expenses and savings; it’s free if you have a Google Account. Or, simply download an app to manage your budget and expenses (e.g. Seedly) on your smartphone or tablet. Review your finances every week and decide how much you can afford to set aside for your investment.
Are you hoping to upgrade to a bigger unit or house in the near future? Or, does retiring early sound like one of your goals in the near future? This could mean that you have to put aside an extra amount out of your savings to achieve your goals within a certain time period. Decide on how much of risks you can afford to take for your investments. For example, if you have a short-term objective, investing in less risky investments like bonds could work better for steady and visible cash flow. If you are looking at gaining larger returns in the long-term, consider investing in stocks or diversify your portfolio with a range of investments.
Imagine this. In year 2020, the equities that you have bought crashed by 35%. If you have depended solely on them, you would have lost quite a great sum of money. But what if we turn the case around? Instead of focusing on the equities, you can choose to focus on others like gold, debt and cash, which would have “saved” you from the crash you had with equities and yet give you a decent percentage of returns. The whole idea of diversification is to reduce risk and provide you with higher returns at the same time (as compared to investing in safer instruments like bonds).
Investing in a share of a company that you do not know much about can be risky. It is especially important that you do at least a little homework to understand what you are purchasing, rather than to depend on a broker or trusted friend. For example, you might have a friend who has done well with a stock for the 10-year period and persuades you to join him. However, it might not be as effective for you if you already have plans of going for a 5-year period instead in the start. You can stay aware and keep yourself updated via channels such as news or quarterly results.
Have a full-time job on top of your side investments? If the company decides to fold and you find yourself losing your job all of a sudden, will you have enough finance to cover your daily expenses, your family’s and potential investments? Be sure to have at least 3 months of salary or more to cover yourself before you find the next job, as it prepares you for unpredictable events that might pop up every now and then.
While you may have a detailed plan mapped out for yourself, it may not be enough to reach your financial goals. As markets become volatile or circumstances take a turn, it may cloud your judgement towards your investment(s). Hence, a third party like an experienced Financial Consultant can help to keep you on the right track and make sure you hit your financial goals without any distractions.
So, take action towards successful investing on your own, or consult an experienced professional for greater advice throughout your investment journey today: https://gtgroup.sg/contact-us/