How to choose the right investment option!

So what do you do if you find yourself with an unexpected extra cash?

At first your impulse might be to spend it but hold on a minute what else could you do?

Well a smart idea is to invest that money instead of spending it right away!

How will you know what investment option is right for you?

Review your needs and goals

Before you rush to invest you need a plan! You need to take the time to think about what you really want from your investments. Knowing yourself, your needs, goals and the level of risk you want is a good start.

Consider how long you can invest

Think about how soon you need to get your money back. If you have short term goals then some options will not be the best for you. This is because there are some investment plans that require that you don’t withdraw any funds for a set period of time ranging between five to ten years. 

Once you have decided on your needs and goals, and have assessed how much risk you can take, draw up an investment plan. This plan will help you identify the types of product that could be suitable for you.
If you’re unsure about the types of investment you need, or which investment funds to choose, get professional financial advice.

Avoid high risk investments

A good idea is to start with low risk investments such as government bonds then, add medium-risk investments if you’re happy to accept a higher risk. Only consider higher risk investments once you’ve built up low and medium-risk investments. Even then, only do so if you are willing to accept the risk of losing the money you put into them.

It’s a basic rule of investing that to improve your chance of a better return you have to accept more risk.

However,  you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don’t necessarily move in the same direction which is called diversifying. It can help you smooth out the returns while still achieving growth, and reduce the overall risk in your portfolio.

So what’s your take?

How do you choose the right investment option?

Let me hear from you!

Teri Ann Paisley

Gleaner Online Writer

Tags: investments