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By Herb Lazarus
Investing your money can be a great way to ensure your
financial future. With the right investment choices, you can
be
sure to have money for emergencies, to put towards the
education
of your children, and to have available when the time comes
for
you to retire. There is a key word in the preceding phrase
however- “right”. If you make the wrong investment choices,
you
may just end up where you started or worse, flat broke. Most
people who invest wisely by making the right decisions with
their money follow the same basic investment pattern, although
they may define it by another name. It might be that you are
the cynical type who chooses to believe that the basic rules
could not possibly be as easy as they seem, in an area that
seems so complex. It is true. However, that these rules have
withstood the test of time.
First of all, make sure that the money you choose to invest is
indeed earmarked for the purpose. As in any form of gambling,
there is nothing to be gained and everything to be lost when
it
comes to investing. Do not put up money that you cannot afford
to lose should the market take a downturn.
One rule that people seem to refuse to apply in any area of
their lives, including the world of investing, is lean not on
your own understanding. Most of the time, this is the result
of
people balking at entrusting another person with their money,
believing that with a little understanding they can work the
market themselves. This reasoning is fundamentally flawed. In
the first place, most people will not be able to begin to
unravel the complicated graphs, pie charts, and statistics by
which the investment world relates its information. In order
to
understand what the numbers mean, you will need to have some
basic training. There may come a time after you have had some
experience in the market that you will be able to make sound
decisions on your own, but the initial get-your-feet-wet phase
is not the time to attempt it. Check the background of the
advisor you choose, as there are a lot of brokers out there
looking for a quick fleece. The best brokers will have years
of
experience, a variety of investment backgrounds, and will
probably cost you much less than you might think.
Think long term. Unless you invest millions of dollars
initially, it will take time for your investments to mature
and
begin to accumulate substantial gains. The best investments
are
proven over time, and thus it is best to place your funds in
long term choices. The details of this are plain- it is best
to
forget about this money in terms of a cash fall back, at least
for a number of years.
Diversification is an oft-flogged truism of the investment
world. A good portfolio will include cash and cash equivalents
(GICs, fixed annuities), growth investments (stocks), and
growth and income investments such as mutual funds.
Diversification ensures that you do not have all your eggs in
one basket should any part of the market experience a
downturn.
Note that diversification means not only investing in several
areas, but also making sure that no one area contains a
disproportionate percentage of your funds.
About The Author: Herb Lazarus maintains a website of free
investing advice. Visit his site at:
makeawiseinvestment.com
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