Tips on Investing Money
Nowadays, investing money is very easy because of the various options available. You can invest in bonds and stocks with as little as 100 dollars. The following are some helpful tips for a rookie investor:
Determine What Your Investment Timeline Is?
You need to ask yourself: Why are you investing? Is it money that you do not need for a long while? Is it something you might need in two years or your retirement in 20-30 years? For a brief timeline, go for less volatile and safer investments. For long timelines, you can go for stocks.
Develop a Strategy
An investment policy statement also known as an IPS, is a plan that lays out your goals. You may be planning to fund your retirement, pay child tuition or grow your wealth. The IPS will also show the amount of profit you intend to gain from your investment and when you intend to gain this profit. The returns you expect to gain will determine the risk you are willing to take.
What are You Comfortable With?
All investments have different risk levels. You should determine what level of risk you can be able to tolerate. Investing within your comfort zone implies buying a portfolio that is properly researched and is in line with your goals, risk tolerance and time horizon.
Find Out Your Mix
You should divide your portfolio between stocks, bonds and cash based on your risk tolerance, goals and time limit. It is advisable to invest more on stocks than bonds. A common trend is to construct a portfolio that goes with your age. For instance, if you are 30 years, you would invest 30% in bonds and the rest in stocks. Stocks are more volatile and have higher returns than bonds.
To minimize risk, it is advisable to include various investments in your portfolio. A portfolio that has different investments normally leads to higher returns and is less risky than an individual investment. Bradley Riefler, the CEO of Forefront Management Group can lend you a hand in determining the right kind of assets to invest in. With over 30 years in the field of capital management, having begun his career in 1982, you can never go wrong leaving your investment plans in the capable hands of Bradley Riefler.
You should rebalance your portfolio regularly, at least once every year. Rebalancing means selling or buying investments in your portfolio so that you can still achieve the asset allocation you intended.
There are different kinds of accounts. You should determine which account will carry what investment. Selecting the right account for your investment will help you retain more of your gains. For instance, if your profits are taxed like ordinary income, then you are using tax deferred accounts for investments such as bonds. Tax efficient investments like stock are put into taxable accounts.