If you are new at this, then Investment can be a little intimidating for you, but it is absolutely necessary to increase your wealth and to gain your financial goals. The investment comes with all kinds of perks and risks, but you can plan your investment better by keeping an eye on the time horizon and your risk tolerance.
The best way to invest money is to find an investment style that you are good at and set goals that you want to achieve in the future. We are here to discuss how to make a successful investment portfolio and learn the best ways to invest in 2019.
What is Investing
Investing means that you allocate your money or resources in bonds, funds, into stock, real estate, or in other businesses to gain profit and with the expectation that it will grow further in the future. In order to maintain the spending power of your wealth, growth of the business in which you have invested is essential. Growth in your business helps you outpace inflation or slump in the market.
If you play safe and keep your capital in a savings account for years, then you will have much less value after 30 or 40 years. Your capital will be much smaller when you take it out from a savings account compared to an amount invested in a successful business.
If you are planning to invest, then be prepared for some risks and rewards. You have to take greater risks if you want a greater reward. So, in order to be a successful investor, you need to balance your risks with your rewards. History shows that the people who devise their investment strategy wisely produce high profits in return.
Benefits of Investment
A good investor always knows when is a good time to invest, and that time is now. This means that if you have not invested yet, then you are missing the opportunity to make thousands of dollars in compound interest that can be earned easily.
There will always be some risk involved in any kind of business or investment, but the potential gains make investing the right choice for you. Start making investment goals and risk tolerance if you already start investing to gain maximum benefits. Here are some pointers to make investment easy and profitable for you.
Consider your time Horizon
People do investment for various reasons, but the most common of them is to save for retirement. You can also invest in multiple reasons at the same time with multiple investment campaigns. Deciding your investment goals will help you make a solid investment strategy which will be based on your desired time horizon, and it will also help you allocate your assets efficiently.
Long Term Investment
In long term investment, you are able to take more risks with a heavy stock portfolio. The stock market goes down from time to time, but the historical data reveals that the annual returns are stable and average around 10% since the 1930s.
For those who are not aiming for retirement and have goals to achieve in about a decade away, a portfolio with multiple functions can help them gain more returns while lowering the risk factor. You can switch towards the riskier stocks in your portfolio at the end of your intermediate time horizon for safe investment and to gain a healthy return.
Short Term Investment
If your goal is to save and earn for the near future like a down payment on a home or planning for vacations, then you should be more careful with your investment choices. Your investment choices must involve safe investment strategies like money market accounts and stocking up for the coming events like Christmas or Easter, where demand and price for certain items increased.
Determine Risk Tolerance
Finding your risk tolerance will help you determine your investment strategy. Finding your investment horizon also helps you figure your risk tolerance. Short term investors have less risk tolerance then the people who are preparing for their retirement. As a general practice to lower the risk, don’t put all your eggs in one basket.
Distribute your stock in various companies and industries when your stock portfolio is heavy. This way, you can save yourself from a total loss if one sector is facing a downfall. Keep a healthy mix of bonds and stock and keep readjusting their ratio according to the time to keep your investment portfolio healthy.
Where to Invest
It is the question every new investor asking. Let us look at some of the most common investment strategies practices throughout the world.
1. Stock Mutual Funds
European stock investors invest around 70% of their assets in equities in Europe. Britain, Germany, Netherland, France, and Switzerland are the portfolios that emphasize the region’s largest and most developed markets. One can also invest in the regions smaller emerging markets of Eastern Europe.
2. Public Provident Fund
This is an investment opportunity to which a lot of people turn to. It has a long tenure of 15 years, and you will get tax free interest that makes a huge impact in the later years. It is a safe investment option because it is backed by principal investment and has a sovereign guarantee.
3. Fix Deposit
Investing in fixed bank deposit is a safe choice considered in many Asian countries. Each deposit is ensured by the deposit insurance and credit guarantee corporation DICGC rules. You can utilize monthly, three months, six months, or yearly cumulative invest options with an increased return.
4. Real Estate
This is one of the more popular investment methods for long term investment. If you plan your investment carefully and choose the right location, then the risk factor in this kind of investment is minimal. Not only it will grow in value, but you can also earn by renting it to the other party.
Choosing the Right Broker
Choosing the right broker for your investment is very important in today’s world. You can find the best broker by familiarizing with the type of investments that we mentioned above. Mintos is a reliable P2P investment portal from Europe that connects you with loan originators from Europe’s biggest market place and all over the world. With Mintos, you can invest in loans and gain monthly interest easily and safely.
It is wise to prepare for retirement for any new investor. You can do it by both employer-sponsored plans or creating your retirement fund. Individual brokerage accounts are also a great way to grow your wealth over time, and it is beneficial for you to get help from an online broker or advisor.
Apart from bonds, real estate, or stocks, there are also many great ways to invest like P2P, gold, or even crowdfunding. Make sure to align your risk tolerance and time horizon to create a portfolio that suits your needs.