1.5 min

Investment Basics

Investment Basics

In the world of financial markets and investing there are basic rules which investors need to know to ensure their decisions are in line with their goals and risk appetite.

It is important to make informed decisions, knowing the nature of your investment and whether it suits your financial situation. Consider the following guidelines:

  • When do I need to have access to my investment?

Consider your age or stage of life to determine the length of time you should invest and how much risk you can afford to take.

  • Do I need a monthly income or do I want capital growth?

This will determine the type of investment product you choose. You may desire high returns or be content with a long term fixed return investment. A qualified financial planner can advise you as to which product will meet your particular needs in both the short and long term.

  • What is my investment going to cost me?

Some investments require fees or commissions to be paid. Therefore make sure your financial advisor discloses what you will be paying before investing. Then there is the matter of tax regulations and exemptions. A qualified financial advisor can inform you about tax implications of different investments before you make your decision.

  • Is my financial advisor registered with the Financial Services Board?

Make sure your advisor and the company you are investing in are fully regulated. Opt for an experienced advisor who has been recommended and who is registered with the FSB.

Things to consider when weighing up different investment options:

Make sure you are comparing apples with apples. Look at product features, rate of return, as well as the term of the investment. This will allow you to compare fees and ensure you get the best rate, based on the risk involved.

Whether you are a novice investor or a seasoned pro, it is advisable that you never put all your eggs in one basket.

Having a diversified portfolio is key. Try to ensure that you have four major asset classes in your portfolio. Also important is regularly rebalancing your portfolio. You will achieve great returns if you do not over expose your investment portfolio and stick to your investment strategy.

Finally, keep in mind that your situation and even your risk appetite may change as time goes on. It is advisable to review your investments at least once a year to ensure your investments continue to meet your needs and goals.

Author: Floris Slabbert, Country Manager, Ecsponent Financial Services
Written for realsuccess.net

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