Saving up your cash is one difficult thing to do. That is why if you decide to invest it something, you should also ensure that it’s a good and safe investment.
There are many factors to consider when you say good and safe, and having enough knowledge of these factors will surely come a long way.
To guide beginners like you, here are some useful tips that will surely come handy.
Know your purpose
In order to make a good investment you should first determine the main reason of it. Are you planning to retire soon? Or are you thinking of putting up a business?
There are many kinds of investments out there and their returns vary as well. Knowing your main reason will let you determine which investment is right for you.
Understand the risks
Risks are always involved in investing, and it’s a wise move to have good knowledge about it.
Wouldn’t it be a great hassle to be stuck in a problem that’s too difficult to solve? That is why you should have a clear understanding of all the risks that are entailed with the type of investment you want to protect yourself from financial disaster.
If self study won’t do, you can hire experts to guide you along the way.
Calculate how much
If you were able to save $200,000 and you’re thinking of investing, it’s not wise to invest the entire amount.
An author once said “Many first time investors think that they should invest all of their savings.” This is really unnecessary.
What if you got extremely ill? Or what if you suddenly lost your job? Where will you get the cash to sustain all your financial needs?
Investing is not like saving money in a bank that you can withdraw anytime you want. Once you contribute with something to make money, you can never get it back unless the returns are ready. Be wise about this if you don’t want to deal with cash shortage in the future.
If you invested in something and you plan to use the money to purchase a car, in let’s say 3 years, you may need to go for short-term investments.
On the contrary if you’re investing in something for your retirement, you can go for long term depending on when you will retire.
Knowing when you need to access the finances is quite similar to knowing your purpose for investing. Everything should match to ensure that you’re making a good investment.
One at a time
If you’re a first time investor who suddenly got fond in investing, you better slow down. You may have the money but it’s not advisable to make dual (or even more) investments.
It is best to focus on your first investment and make observations on how it flows. This way, you will have more thoughts about investing. You should also ensure that you have a separate saving just in case emergencies will happen.
Good investment does not revolve on the number money contributions; it’s all about the safety of your cash.