IT'S NO understatement to say that there are many investment options now available. Not only are there a lot of opportunities to invest locally, but also many companies now give you access to international investment products and services. While we may concede that having many alternatives is a good thing, they sometimes only serve to make a potentially confusing situation, even more puzzling. Fear not, however, as before investing your hard earned money, there are certain questions you need to ask yourself that will ease the selection process.
WHAT ARE YOUR PERSONAL GOALS?
If you don't know where you're going, chances are you'll probably never get there, that is why it is important to establish your financial goals before you even start to think about investing your money.
Everyone has different aspirations and these will ultimately drive your investment decisions. Are you investing for a down payment on a house? For retirement? Your child's education? Or a car? You can begin to map out your goals by:
Looking into your future
Imagining how you would like to achieve your goals. For instance, if you would like to purchase a car, what kind of car is it? This is important, as the cost of the car will determine how much money you will need to earn on your investment.
Write your targets down, categorising them by the age at which you want to accomplish them. The table can be used as a guide.
HOW LONG DO YOU NEED TO INVEST?
How long you would like to invest will be dependent on your goals. For example, your short-term goals will require short-term investments. Avoid making the mistake of tying up your funds in long-term investments, when there is the possibility that you may need your money in the short-term.
WHAT IS YOUR INVESTMENT STYLE?
There are two variables to consider when determining your investment style; they are your tolerance for risk and the amount of time you can dedicate to investing.
Risk Tolerance: Risk is the chance you take that your returns on a particular investment may vary. There are various degrees of risk across the 'investment spectrum', from government bonds, that are considered relatively risk-free, to stocks, where you can lose all of your money. So what is considered to be an acceptable level of risk? This is different for every individual. A good rule of thumb is that if you happen to wake up in the middle of the night worrying about your investments, then you are probably not investing in the best product for you. If your investments are causing you too much anxiety, it's time to reconsider your choices. You will know your personal risk tolerance, when you find your own comfort zone.
Time: How much time do you want to spend on investing? Fifteen minutes per month or eight hours per week? In other words, do you want to be a passive or active investor? Those with less time to dedicate, would probably prefer investments that require less monitoring such as mutual funds, while those with more time to dedicate might enjoy researching companies and poring over financial statements to pick individual stocks. Once you have answered all these questions, it is now time to sit with your investment advisor to determine what investment products fit your required specifications. This will make the investment process easier and will ensure maximum fit for your goals.
To further discuss investing and the many options we have available, contact DB&G Toll Free at 1-888-CALL DBG.
Table
Age 25 - 35
Buy a house
Have two children
Age 35 - 55
Send children to UWI
Send children to graduate school
Age 55 - 75
Build a house on the beach in Portland
Host daughter's wedding
Travel abroad for one month out of each year
