Six Principles Of Investing

Six Principles Of Investing

A basic guide to help you put aside money and make it work for you

Whatever stage of life you’ve reached and whatever future ambitions you may have, you want your money to generate the highest possible return while avoiding unnecessary risk. That’s why it’s critical to invest in a way that’s good for you and will help you achieve your objectives. Six principles of investing is a great place to start the conversation towards better investment decisions.

Developing and maintaining an effective investing strategy is critical to safeguarding your financial future. How much do you want to be in charge of your investments? Investing can be intimidating, but you don’t have to go it alone.

Let’s look at our six principles of investing in more depth.

1. Have an investment plan and stand by it

Your money should work for you in any way you want it to. Whatever your life goals are, proper preparation and successful money investing can help you achieve them. The first step is to determine your investment objectives, which should be based on your long-term objectives.

It’s one thing to set a goal, but a well-thought-out financial strategy can be the difference between hoping for the best and really accomplishing your investment objectives. You must examine your investments on a frequent basis to verify that they are on course, stay focused on your plan, and avoid being sidetracked by short-term market volatility. Being well thought out and planning carefully is crucial part of the six principles to investing.

2. Cash isn’t always the way

While keeping your money in cash may appear to be a safe and secure alternative, inflation will eat away at your savings. Cash should be supplemented by investments in other asset classes that can beat inflation and offer higher capital growth potential for most people with longer-term investment intentions.

You can’t afford to overlook the corrosive effect rising prices can have on the value of your assets if you’re preparing for important goals years away, such as retirement. Different asset classes offer different levels of inflation protection.

3. Diversification is key along with considering your investment portfolio as a whole

We wouldn’t need to diversify our investments if we could see into the future. We could simply pick a date when we needed our money back and then chose the investment that would provide us the best return on that date. Having a diverse portfolio of investments is one of the simplest methods to control financial risk and increase your chances of success.

You may diversify your portfolio by investing in a variety of asset classes, geographic markets, and sectors. A diversified portfolio, which includes a variety of assets, can help to smooth out the ups and downs and protect your portfolio from unnecessary risk.

4. Start investing as early as possible

One of the most effective strategies to accumulate wealth is to begin early. Waiting until you have a substantial sum of money or cash flow to invest is typically thought to be less effective than investing over a longer period of time. This is due to compounding’s power. The snowball effect occurs when the money you gain through investment generates even more earnings.

In essence, you grow not only the original money you invested, but also any interest, dividends, and capital gains you have accrued. The more time you invest, the more time your investment gains have to compound. This is key to the six principles of investing.

5. Don’t rashly change your plans.

Some investors suffer from what behaviourists refer to as “activity bias,” or the need to “simply do something” in a crisis, regardless of whether or not the action would be beneficial.
It’s easy to abandon your plans and sell your investments while they’re losing value, but this can be harmful because you won’t be able to benefit from any asset price recovery.

Markets go through cycles, and it’s necessary to understand that some years will be better than others. Short-term market drops tend to be smoothed out over time, enhancing the likelihood of solid returns.

6. Getting tailored Investment advice & making informed investing decisions

While the suggestions above are fantastic general advice, there’s no alternative for an investment strategy that’s built just for you. We can build together a worldwide portfolio of equities, fixed income, cash, and, when appropriate, alternative assets once we know an investor’s risk tolerance and investment goals.

The objective is to invest for the long term while maximising after-tax returns. It could be the best decision you ever make. Making the best investment decisions for your future can be difficult. However, with the correct investing strategy in place, you may be confident in your ability to make well-informed decisions and achieve the financial future you desire.

Life doesn’t stand still, and neither should your financial strategy. People’s ambitions can be broadly classified into three categories: fundamental necessities, lifestyle desires, and legacy aspirations, depending on what stage of life they are in. One of the most helpful things you can do for your personal money and long-term financial well-being is to seek investing guidance.

Speaking with an experienced professional

At the end of the day, it can be a lot easier to speak with a professional about investing. It’s a delicate topic and can require in depth discussion to get the right advice. It’s not something you’d want to skim over or misinterpret. When it comes to investment, knowledge is key and we make sure your money is taken care of and you know exactly how we manage it for you.

With over 30 years experience in the industry our independent financial advisor Tony Hollom is on hand to assist you with your investment portfolio today. You might want to know what a financial advisor actually does for you? The best way to find out is to get in touch with him today so he can best advise you going forward & give you more insight on the six principles of investing.

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Investments

All investments involve a degree of risk of some kind. This section describes some of the risks which could be relevant to the services we provide you. We may provide further risk information during the course of our services to you, as appropriate.

Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets outside our control. Investments and the income from them may go down as well as up and you may get back less than the amount you invested. Past performance is not a guide to future performance.

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