Investing wisely - a few simple rules
Regardless of the type of investment you’re making and whether your investment portfolio is brand new or well established there are a few simple rules to investing that may help you along your way. Here are some simple rules for investing wisely.
- Think about what you want
Identify exactly what you are aiming for, when you would like to achieve it and how much of a risk you’re willing to take along the way. Taking stock of what you want from your investments, at any stage of your life, will help to make your investment decisions a lot easier and help to bring you closer to achieving your financial goals.
- Consider your options
There are many different types of investment options available, provided by many different companies in many different ways. If you are attracted to some features a product offers and not others, don’t settle for second best. Look at alternative products available and find one that suits your needs – with so many financial products available these days, the odds are good that you’ll find almost exactly what you’re looking for, just by looking around.
Think of an investment as you would any other product. You wouldn’t buy a car, house or even dishwasher without first considering exactly what you needed it to provide, how long you would be requiring it and what financial sacrifices you were willing to make for it – so why not do the same for an investment purchase?
Australian companies are required by law to provide you with a lot of detail on the products they offer. There are also a lot of independent reviewers in Australia who spend their days comparing product features and doing the hard investigative work for consumers like you. Ask your financial adviser to access some of this information for you, get online and search for product comparisons, or phone the financial companies themselves and ask them to explain how their products compare with others in the market. Don’t be shy – it’s your money, not theirs!
A time-honoured way of reducing potential investment risks is to diversify your investments. Quite simply, don’t put all of your eggs in one basket! A good way to diversify is to ensure that you’re not just investing in one type of investment (eg. shares), one region (eg. Australian investments) or one company (eg. one of the big investment banks).
- Get financial advice
A good financial adviser will bring knowledge and experience to your investment portfolio. They will assess your situation, match this with an appropriate portfolio and monitor your portfolio over time as your life changes. Financial advisers are also experienced in maximising your superannuation, choosing mortgages, minimising tax, planning for retirement, estate planning and more. Don’t underestimate the power of good financial advice!