After the huge social and economic upheavals of 2020, it’s understandable that many of us have started to look more closely at our financial health. With interest rates at historic lows, letting money sit in the bank no longer makes sense. It’s natural to consider more lucrative ways to make our cash reserves work for us. If you’re considering other ways to grow your money, the good news is that there have never been more options. To help you reach your goals and minimize your risks, just keep these few things in mind.
Clarify your goals
The safest way to start is to invest in a mutual fund, as these are lower risk and operated by expert fund managers. You’ll have the choice of making a one-time investment or making contributions monthly.
Be clear about what you want to achieve. Long-term financial security so you can retire early? Short-term profits to fund a different lifestyle? A fund for your kid’s college?
Whatever your goal, ensure that you choose the investment mix that will get you there. Don’t be side-tracked by get-rich-quick bubbles such as Gamestop.
Do your homework
Unless you’re an experienced builder, it would be madness to buy all the materials for a house, then try to build it yourself. A ‘gut feeling’ that you’d be good at it, wouldn’t be enough. The fact that you’ve dabbled in some DIY wouldn’t equip you. Yet many people believe that they can successfully play’ the stock markets without any real understanding of the way they work.
Professional investors spend years tracking the behavior of the markets. They make decisions backed up by data and objective analysis. Chose one of the great online trading platforms, such as e-Toro and fantastic stock analysis apps available, to help you.
Investing in something you know about is a great way to use some of your funds. If you love music, companies such as Hipgnosis are creating a stir, buying rights to the catalog of some of the world’s best-known artists.
If real estate is more your thing, consider investing in a real estate investment trust (REIT), in which you take a share in a portfolio of properties, which is then managed on your behalf.
Expect the unexpected
How much can you afford to lose without it affecting your lifestyle? The answer is essential to determine how much to invest, and your risk tolerance.
Ensure you have an emergency fund, easily accessible if it’s ever needed to avoid having to liquidate your investments at a loss.
Beware of ‘chasing’ in the latest stock market fads. Trying to make quick returns by leveraging high-risk investments is the fastest way to lose everything.
The safest way to start is with lower-risk mutual funds which are operated by expert fund managers and cover a spread of shares.
Seek expert advice
The financial can generate fantastic profits, but also imply a high degree of risk. Consider consulting a professional investment manager for some dispassionate advice, and possibly ongoing portfolio management.