Determining Investment Objectives
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If you want to make money from investing your first job is to decide what you want from your investments? Only when you are clear in your mind can you make a plan and once you have a plan you have a framework with which to proceed.
You Will Need:
- A computer access to the Internet.
- Financial planning software which is capable of handling investments.
- A telephone.
- Possibly a broker.
- A notebook and pen.
Step 1
Take your notebook and pen, take stock of your life and ask yourself what your financial goals are. Write them down in your notebook. If for instance you young with a job and good income you can take some risk but if you are cash conscious and coming up for retirement you cannot afford to take risks.
Step 2
Do you want capital appreciation or income. This choice will determine what sort of investments you are in a position to go for.
Step 3
OK you are young and want to take some risks, you will plumb for high risk stocks which can rise spectacularly in value and then drop like a stone. You need to be a proactive investor with an ever-watchful eye on the market. As an active trader like this you need financial information and your strategy is definitely short term. This investment strategy is not advised for widows, orphans or retirees.
Step 4
You’re a non-risk taker and prefer the long-term investment approach. This is designed to provide income as opposed to capital growth. You will seek stable companies with a good track record, and look to the blue chip market or even government bonds. Perhaps you would benefit from the services of a broker who could advise you on good stocks which are likely to meet your expectations. This is the preferred route for widows, orphans and retirees.
Step 5
The average person will seek a diversified approach to selecting stocks and shares. A diversified portfolio is going overall to be less influenced by current market trends. It will work on the rob Peter to pay Paul principle. Thus in the current market you will notice that property shares are doing badly but the oil and gas sector is performing well. Your property shares might be losing money for you but oil and gas is making up for the deficit. As a result you can relax and smell the roses instead of lying awake at night!
Tip:
All stocks can gain as well as lose in value. Always depend on good advice and never risk more than you can afford to lose. That might be poor advice in the current market where US interest rates are so low that savers stand to risk their savings to inflation.
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