Oct 25, 2011

How do you proceed when it is about serious investments?

Making a proper investment is not everybody’s cup of tea.  You need to learn, struggle and then re-learn from the decisions you take during initial years of your investment.  It is more of rigorous work and dedicated strategy taking that keeps you ahead of all investment related risks and uncertainties.  Therefore, before you get started you need full guidance on how to make most of your money.

Here are a few guidelines you may find worthy:
Get your basics clear first. Know what are the thumb rules of correct investment policy and how should you approach to each of them. Define your investment goals and think how it is going to satisfy your saving s criteria.
Here are the thumb rules to guide you the next steps:

A. Asset allocation:

Decide the proportion or the amount you are going to invest in different market sector.  There are four main types you can opt - Equities, Bonds, cash and property. Each asset class has their own degree of risks and returns associated.  At younger days you can withhold greater risks because you have time to gain from long term benefit. Make sure you create a balance among four asset classes so that earning is steady.    

B. Diversification:

Learn how you can tame fluctuating market conditions in your favour.  Risk-return trade-off usually varies from time to time. So you need to spread your money in different assets and markets to ensure consistent return.  You can choose assets based on country, industry sectors, and investment style.

C. Long term planning:

It is important that you remain focused to your long term goals. There can be occasional downturns and you have to ensure that if one of your investments perform badly the total effect is compensated.

D. Regular saving:

It does not matter how small you are investing. It should be regular and should continue over a long period of time. Choose automatic deposits so that it gets stored without your notice and in the end you see results without much of your effort.  For example you can think of investing in ISA (Individual Savings Account) for a guaranteed return.

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