Before investing, it’s recommended that you speak to a reputable financial advisor. It’s his/her job to help you decide on long-term financial strategies that suit your objectives. They can guide you through the financial investment landscape, helping you avoid pitfalls that you could fall into if you invested by yourself.
It’s important to find an independent financial advisor; they’re not associated with any investment service providers.
Here is a list of six things that can help increase the success of your investments.
- Have an investment plan
Blindly investing in a savings product is never a good idea, always consider your financial goals: are you saving for retirement? Or perhaps for a child’s education? A financial advisor can help you design an effective long-term plan that will assist you in achieving your financial objectives.
- Invest in the right product to suit your objectives
There are many different investment products available – each with their own set of pros and cons. The product you choose should be based on your objectives. For example, investing in a retirement annuity has the benefit of tax-deductible contributions, but you’re only going to be able to access the money once you reach 55 years of age.
- Consider inflation
Over time, your money can lose its value due to an increase in the cost of goods and services; essentially, leaving you able to buy less with the same amount of money – this is known as inflation.
Your investment should yield a return that can (at least) compensate for the change in the inflation rate over the duration of your investment – this can help maintain the value of your money.
- Cashing in your retirement savings if you change jobs
If you change your job, it can be enticing to cash in your retirement savings. However, preserving your money by investing it in an appropriate savings product is worthwhile because you’ll reap the rewards of compound interest. If you choose to take your retirement savings in cash instead of preserving it, there’s a possibility that you won’t have enough money to live off once you retire.
- Only focusing on one asset class
Diversification of your investment portfolio can be pivotal to investment success. For example, investing solely in an equity fund may be tempting because of the potential for higher returns over a long period of time. However, the fund has a high susceptibility to short-term market fluctuations, which may result in underperformance for a long time. It’s beneficial to invest in other asset classes to lower investment risk and help grow your savings.
A financial advisor can use their knowledge of different asset classes to help you diversify your investments according to your goals.
- Don’t let your emotions get the better of you
Many investors make two errors that can lessen the value of savings: picking the incorrect time to buy and sell investments and switching between investments too often. A financial advisor can help investors minimize doubt – especially during volatile market conditions – so that you keep a level head and avoid making decisions for the wrong reasons.
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