Investment
In order to do this you need to be aware of what assets, liabilities, income streams and expenditures you have thus you are clear about how much you can afford to commit to investment.
Below are some tips to help you take your first steps
Investing in the market
when investing in the market, even though the purpose is that your savings grow the market carries more risk than simply putting your money in a bank. By investing in the stock market directly or through investment companies, you risk losing your money, but there is greater potential for your money to grow over the long term. The purchasing power of savings in a bank risks being eroded by inflation over time, or growing only very slowly; but it does afford security of capital by comparison with equity investment. Investment companies can play an important role in your portfolio.
Consider your liabilities
You should think seriously about investing money in equities if you are in a lot of debt. Most debts come with interest payments, so they can be a drain on your finances.
Common mistakes
To
help you avoid some of the
pitfalls of investing, here are 2 examples of the mistakes people make.
Putting
all your eggs in one
basket Spread your risk with a diversified portfolio of assets. In
other words,
don’t put all your money in equities. You are not certain to
make a profit and
may lose money.
Investing more than you can afford
Calculate at the start what you are going to invest and what you want to put into savings, and stick to it unless your circumstances change.
What do you want from you investment?
Do you want a regular income or are you putting money aside for the long term so it can grow or do you need a combination of income and capital growth?Some investment companies are specifically designed to give an income; others focus on capital growth; and some aim to provide both.