Investment Strategy: Financial Rules and Advice

Although investment profits are not a guarantee, it is much like a chess game. You really don’t know the outcome of the game until the game has been played and the winner has been declared. Anytime you play any type of game, you must have a strategy. Investing your money isn’t any different, you must incorporate an investment strategy

What is an Investment Strategy

Simply put, an investment strategy is a financial plan implemented to invest your money in a variety of ways in various types of investments, in order to meet specified financial goals in a specific time frame.

There are many individual types of investments that you may choose. For instance, the stock market which is a type of investment that contains numerous types of stocks that are a part of different companies in which you can invest.

How To Determine Your Risk Tolerance

If you are brand new to investing, you are going to need some professional help with your investments. Make an appointment with several financial planners and discuss with them what your financial goals are. Choose the financial planner who understands and is willing to listen to you to help you meet your financial goals. Also, check for experience and references when choosing your financial planner.

Investing can become quite confusing if you have not done your research because there are so many types of investments that you can choose. This is where your investment strategy coupled with your investment style emerges.

What Is Your Investment Style?

It is important that you know what your investment style is before you start investing. Determining your investment style will help you understand your risk tolerance. An investment style ties in with your level of risk and there are only three styles to consider, a conservative style, a moderate style and an aggressive style.

It is only natural that if your tolerance for risks are low then you most likely would be a conservative or moderate investor. If you are the betting and risky type then you most likely would be considered an aggressive investor. Whatever your financial goals are will likely determine what style of investing you will use.

Take into consideration what you are investing for. If you are saving for retirement sometime in your future and you are fairly young, invest conservatively. But if you are trying to buy that dream home within the next couple of years then you might need to take a more aggressive approach to investing.

Lastly, you should never invest your money without having a strategy and a goal. This is essentially important. Never give your money to anyone without knowing the basic plans for your money. You must also be proactive in the decision making process of your investments. If you fail to implement a strategy and do not have a goal, you may lose your money and never get it back. Take your time and plan to implement successful investment strategies. Also, set forth goals in order that you may reach your financial destination.

Investing at a Young Age

Investing is just for adults, right? Wrong! Anyone that has the money to invest can invest. Of course, there are some obstacles you will need to get through, but it is far from impossible. For example, if you are a minor, you probably won’t be able to open up your own account with a brokerage firm, but you can get a custodial account with your parents that you can have full access to once you reach the right age, 18 or whatever it is in your state.

Why would teenagers and kids want to invest? Better yet, why would they need to invest? Don’t they get all of their support from their parents? That is like saying why eat healthy if you already take a multivitamin. Yes, parents do support them, but that is no reason not to save money and begin to build wealth now.

Investing at a young age will help teach them how to invest and will increase the chances that they will do it throughout their entire life. Investing has so many benefits. If kids start young, it will help them to save money for college, and besides that, all young people will have more money to manage their life with. Starting young along with teaching them money management will also help keep them from falling into credit card debt and ending up with other financial problems.

Investing young doesn’t they have to invest all their allowance, birthday money, working money, etc. They could just invest a percentage of it. For example, if your kids invested 10% of all the money they receive from birth up until they graduate high school, who knows how much money they would have. They might even be able to pay for a huge chunk, if not all, of their college education! That is truly amazing and totally attainable.

The Best Investment Strategy For Young People

The objectives of investment for young professionals are a little different to those who are in the peak of their careers or those who are retired. Young professionals have the capacity to take more risk with their investments and they are usually more aggressive in terms of investment strategies. The downside to such unstoppable enthusiasm is their impatience to thoroughly learn about an investment product and their lack of experience and knowledge in areas that they choose to invest in. This article offers a few tips and advices to young professionals who are new to diamond investment.

The objectives of investment for young professionals are a little different to those who are in the peak of their careers or those who are retired. Young professionals have the capacity to take more risk with their investments and they are usually more aggressive in terms of investment strategies. The downside to such unstoppable enthusiasm is their impatience to thoroughly learn about a product before investing and their lack of experience and knowledge in areas that they choose to invest in.

Many young investors neglect the important of diversification and would invest their full set of income and savings onto risky stocks in the market for quick cash turnover. The danger of such act is foreseeable – when an economic crisis hits, their hard-earned cash saved from the first few years of their careers all goes into trash. The golden rule for young investors to remember is to remain calm and not be caught up by the fascinations for immediate financial results. All investment portfolios should contain a balance of short term and long term investment, liquid assets and commodities, and most importantly, a spare sum of cash for any emergency purpose which should be equivalent to at least two to three months of one’s basic salary. Being calm and observative in times of turbulence will bring upon financial successes. Young investors should not blindly follow how others invest but learn to understand their own financial needs and investment personalities by constantly reading up on current political and economic affairs and doing financial self-evaluations.

When it comes to investing in commodities, young investors are strongly advised to learn as much as they can about an investable product before deciding what and when to invest. In the case of diamonds, young investors can obtain expert opinions and investing consultations from diamonds investment specialists and learn the secrets of the trade from insiders such as wholesalers and suppliers. With today’s technologies, young investors can also read about the diamond trade online and discover for themselves whether some of the common myths are in fact true from experts and specialists. Attend educational and informative seminars to touch and feel a diamond. Should you be extremely interested, many institutions offer part time and full time study courses on gemstones and diamonds.

Investing in diamonds is a relatively easier mean of commodity investment as to energy goods and others since the source of information and knowledge is everywhere. Besides, investors can touch, feel and look into a diamond and learn to appreciate its value. Having said that, one should not be immediately fascinated by what diamonds have to offer and decide to invest simultaneously. Observe general market trend and worldwide economic cycle before you make a decision. Make sure you seek a reliable and trustworthy diamond investment advisor for expert opinions before owning a diamond.

Investing While Young

Investing while young is a habit that we as a society need to inculcate into our youth. It is not enough to let the youth figure it out on their own. We need to be providing youngsters with formal education not only about the importance of investing early, but the actual hands on mechanics of how to invest wisely.

What are the advantages of investing early?

First and foremost, investing while young affords you a much-needed head start, which is critical to maximizing the benefit of allowing investments to grow over time. When you start investing while young, you have more time in your life to allow your investments to grow, thanks to the benefits of compound interest, and allowing your investments to grow and increase in value.

Another advantage of investing while young is that you have more time to recover from your mistakes. If you end up losing some money in the market, you have more time to recover before you will actually need the money, if you are investing for the long term.

Furthermore, investing in your earlier years affords you the flexibility of being able to take riskier investments. If you lose a lot of money when you are young, you have plenty of time in your life ahead of you to recoup from your losses and rebuild your portfolio. But if you are older, then you may be much less risk averse, since you can’t afford to lose money, and you have less time on your side to recover from your losses, before you will need to cash the money out of the market.

Plus, investing is a learning process, so investing while young gives you more time to learn from your mistakes, and to set goals for yourself that you can achieve later in life. Investing while young, if done properly, can mean that you will have a better quality of life as you get older. If you fail to invest properly in your youth, the quality of your life may actually decline in later years, since you will not have built up your retirement nest egg sufficiently.