Consider the risk of your investment. The risks affect the returns and growth ability. The greater the risk the greater the returns expected. If you expect high returns, be prepared to risk a large loss as well. Choose a risk level that you are comfortable with and can afford. Your risk must suit your circumstances, income, age and family.
Avoid get rich quick schemes. If it sounds too good to be true it probably is. Although there are a few overnight millionaires, most wealth is accumulated over time through long-term investments.
Time in the market is more important than trying to time the markets correctly. Don’t wait because you think it’s a bad time to invest. The longer you have an investment, the greater the returns.
Have a long-term strategy. Changing investments may be expensive. Many investments only show real growth after a couple of years.
Don’t put all your eggs in one basket. Diversify your investments, making sure you have a range of high, medium and low-risk investments.
Choose an adviser that you trust. Before you invest your money, make sure you get advice from a financial adviser and that they conduct a needs analysis for you.
Ask to see the admin costs and brokers commission upfront for any policies or investments. See how much of your investment goes to cover expenses and how much is actually invested.
Past performance is no indication of future performance. Just because an investment has done well in the past, doesn’t mean it will do well in the future. This depends on factors such as the market, the economy, the environment and management.
Investments change daily. Don’t make decisions based on daily fluctuations. Rather take a long-term view of several years.
All markets go through highs and lows. Ride them out and stick with your long-term strategy.
When you are younger, you might have a higher tolerance for risk as you have time to wait for the lows to recover. When you get older, invest in higher-risk and lower-risk, stable, income-generating investments.
Look for real returns on investment. Remember inflation eats into investment growth. Your return should at a minimum be higher than inflation.
Be responsible for your investments. Good financial advice is important but remember knowledge is power. Read up about your investments and keep up to date.
Review your investments regularly. Check your returns and read all your statements carefully.
