Once you set aside money to invest, the next logical question is where to invest it. Well, there are a few things you want to consider before making that decision.
For one thing, you need to understand your risk tolerance. If you are the kind of person who checks every day, or at least frequently, to see if your investment made money and not lost money; then there’s a good chance you want an investment strategy that doesn’t have much risk. Meaning you want an investment that doesn’t have much volatility, where one day it’s up a lot and the next day it’s down a lot.
Sometimes the sensitivity to volatility comes down to the way we view money in our lives. And other times it is largely based on our level of understanding or experience with investing. But another very important factor is time. Determining the right type of investment that fits your comfort level comes down to the simple question; how long you want your money to be invested. If you’re going to invest the money for a twenty year goal, like retirement, the type of investment vehicle you choose will be different than if you are only investing for a year or two.
You see there are many different types of investments to suit many kinds of investors. If investing is new to you, I recommend you read the two articles here in the Learning Center called “Investment Planning: The Basics” and “Understanding Investment Terms and Concepts.”
While it is important to get started as soon as you can with building your investment portfolio, you also want to be sure your investment strategy complements your goals and abilities, as well as your risk tolerance. To help you learn more about strategy, be sure to check out the other section under investing that I dedicated to investing strategies.
As you know, the purpose of this website isn’t so you have to do it all on your own; it’s a complete resource. So if you have a question, you can click the link above to schedule a Free 15 minute consultation. Take advantage of the opportunity to get your questions answered so you make the right choices.
Take care and invest wisely!