Investments

The Need to Invest

Investment markets are volatile and unpredictable. Despite the uncertainties, there is no doubt about the need to invest so that we can preserve and grow our wealth. If your money is lying idle or earning a stable but low interest in a bank, you will soon find that you have less to spend as inflation slowly erodes the purchasing power of your money away.

 
Invest Right

It appears that more people are losing than gaining from their investments. This is not surprising, since people often make common investing mistakes like frequently moving their money from one investment to another. With the right investment strategies, however, investments can be a rewarding experience.

Here are some common investing mistakes to take note of.

~ Timing the Market
~ Responding to 'Noise'
~ Chasing after 'Hot' Funds
~ Putting Too Many Eggs in the Same Basket
~ Investing Without an Overall Plan

Simple Strategies to Manage Investment Risks

Risk is a fundamental and inevitable part of the investment equation. Successful investing is really about managing risk, not avoiding it:

~ Invest a fixed amount at regular intervals
~ Invest in a variety of investments
~ Stagger maturity dates

The Focal Point of Your Investment Strategy

A strategically planned investment portfolio will stand a much better chance of achieving your financial objective. The focal point of your investment strategy should lie in asset allocation. Asset allocation not only reduces all forms of investment risks, it also accounts for over 90%* of the variation in your investment returns.

Asset Allocation is the process of spreading your money among the four asset classes - stock, bond, property and cash.

Asset allocation can helps you to achieve your investment goals with greater certainty. Although the performances of the asset classes fluctuate and are totally unpredictable in the short term, they generally demonstrate a fair bit of consistency over time.

Of course, you can attain extraordinary returns if you are willing to take extraordinary risk. However, before you take the plunge into a high risk asset allocation strategy, you have to ensure that you have:

~ At least 5 years investment time frame
~ High emotional risk tolerance
~ Low liquidity needs
~ Little need for regular income

Reviewing Your Investment Portfolio
While you should not make short term adjustments to your investment portfolio in response to market fluctuations, you need to periodically monitor its progress and make adjustments to cater to changes.

A competent financial adviser can help you put in place an investment strategy that can preserve and grow your wealth. He/she will map out a strategy that is appropriate for your current circumstances and future lifestyle goals.

Start a partnership with your financial adviser and you can reap the rewards of investing strategically.

*Source: Ibbotson Associates, Inc.

 
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