Start investing today – Know the basics!
The idea of investing can seem very confusing at times, especially with the current saturation of information in the media. It is always the best decision to go to the professionals for advice on building your portfolio. Here are a few points to keep in mind though:{{more}}
1. Determine your investment goals and risk profile.
Whether you are saving to build a good nest egg or just for a lavish dream vacation, you need to set goals on how you will attain that income. One of the main principles of investing is the higher the risk, the greater the return. Can you tolerate high risk investments or would you settle for a lower return for the peace of mind you get from a lower risk investment. After this is determined, you are better equipped to go ahead and create your portfolio.
2. Diversify
Have you ever heard the saying “donât put all your eggs in one basketâ. This may sound cliché, but spreading of investments across various asset classes (bonds, stocks, and cash) is very important. All businesses have cycles; when one of your investments may be losing, another may be gaining, thus allowing you to positively balance your portfolio returns. Failing to diversify leaves individuals vulnerable to fluctuations in a particular investment security or sector and sometimes even the loss of all invested funds if that security or sector fails; so it is important that diversification is part of your investment strategy.
3. Contribute regularly
Contributing on a regular basis to your portfolio is a great way to build wealth. It may be difficult to make frequent large lump sum deposits, therefore, a better strategy may be monthly contributions. Regular contributions are also the best way to develop the discipline that is key to savings and building your nest egg in the shortest possible time frame.
4. Reviews
Markets are volatile, resulting in daily rate fluctuations. This creates the need for regular reviews of your portfolio and potential asset reallocations. Under regular conditions a semi-annual portfolio review may be sufficient; however, with current market volatility, shorter intervals between reviews may be required.
Whatever your agreed review period, the important thing is to review and adjust your strategy if and when necessary.
Guidance is critical in making the right investment decisions and selecting the right assets to reach your investment goals. To avoid confusion and common investing mistakes, you should consider seeking advice from an investment broker or advisor before proceeding. Now that you have the basics â start investing today!
All information contained in this article has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and estimates constitute the authorâs judgment as of the date of the article; however, neither its accuracy and completeness, nor the opinions based thereon are guaranteed. As such, no warranty, express or implied, as to the accuracy, timeliness or completeness of this article is given or made by First Citizens Investment Services in any form whatsoever.
First Citizens Investment Services and/or its employees or directors may, where applicable, make markets and effect transactions, or have positions in securities or companies mentioned herein. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer or a solicitation to buy or sell.
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