Guidelines for Selecting Investment
|November 11, 2013||Posted by bella under Finance|
Investments must always be associated with risk. Surely you’ve heard the term “high risk high return”. Everyone will want to maximize the benefits of investing. There are some things that serve as guidelines for selecting an investment, so that no one choose who can cause us to lose.
Among them are :
• Know the level of risk that you bear.
Any investment decision should consider the risks and benefits. To obtain greater benefits, you must be ready to bear great risks as well. Conversely, the lower the risk borne by, the lower the level of benefits that can be expected.
• Know Your Investment Time period
The term of your investment can assist you in determining some major risks that can be borne. In general, people who invest for the long term may bear a greater risk. This is due to investment in stocks experiencing high fluctuations from year to year. But the average profit rate for long-term stable.
• Get to know yourself
Knowing your investment horizon is only part of the process for choosing the right investments. You also have to understand your company about the investment and whether you feel at ease with the risks faced. Ask questions like these: Can I run the risk of decreasing the value of my investment principal, even if only temporarily?
If the value of my investment dropped dramatically, can I stay and hope that its value will rise again?
Once I invest, would I check it without making major changes?
If most of your answer is “no”, you may not be able to feel secure when investing in stocks. If you invest directly in the stock market you should be able to bear the uncertainty and market fluctuations. In other words, investing in stocks requires a high durability. The longer the period you invest in stocks, the more likely the stock market will benefit you expect. In conclusion, the period will provide an opportunity to change the unfavorable market situation.
• Assess your finances
For most people, investing in mutual funds is only part of total assets. If you invest more in time deposits, you may be able to take greater risks for greater levels of benefit also from investments in mutual funds.
• Evaluate the performance of your investments
Many people choose mutual funds based on high profit. Historical data prove that the mutual funds that have good performance in the past does not always give the same performance in the days to come. Past performance just shows how investment managers can achieve its objectives.
Professional investors agree that one secret to achieving a better rate of return consistently is a diversified and invested in more than one mutual fund. Diversification is a way to control risk because if you should invest in some high-risk mutual funds, if the value of one investment is declining, the value of other investments that may rise.
• Review your investment choices
Married, retired, has an infant is the stage of the life cycle that can change your financial condition. Recheck your choice to remain in accordance with changes in your cycle.