few pointers to think through before start investing

There is an article from asia1.com, which I think is good read for everyone.

There are the pointers:

1) What are your investment objectives? What is your investment horizon?

Investment objectives are set by balancing your current and future financial needs.

A young person who has a longer expected life span, can afford to view his/her investments over a longer time horizon and thus take on riskier investments in exchange for potentially higher returns.

Other consideration include whether big-ticket expenses such as a wedding, a car or a house are on the cards, and whether you intend to save for and finance your children’s university education.

2) What is your financial situation/ net worth?

It’s also worth having a clear idea of how monthly income and expenses affect how much you can invest.

Remember, Invest only with money you can comfortably spare both now and in the foreseeable future.

This mean, you can sleep well at night when you parted the money into investment.

3) What is your risk profile?

Not just how much risk you think you can take, but how much you can actually afford to take.

4) How much do you know about investing?

‘An investment in knowledge always pays the best interest,’ Benjamin Franklin once said, a phrase just as well applied to investing for financial gain.

The basic rule is to ask till you understand, and if you still don’t, avoid.

5) Diversification and asset allocation

Spreading the wealth you wish to invest across a variety of investments helps reduce the risk that the failure of any single investment wipes out the value of your entire portfolio.

The mix of assets in your portfolio ought to help reduce your overall risk.

6) Dollar-cost averaging (DCA)

DCA is supposed to lower the average cost of investments over time compared to that of a one-off investment.

This is because, in theory, regular investing will mean buying more shares when prices are low and fewer shares when prices are high.

This post is to keep myself on continue learning more on investment knowledge.

Source: www.asia1.com

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