Everyone knows that one of the best things you can do with your money is to invest it wisely. I haven’t always been great at this (I like pretty dresses too much) but this year I am determined to get more money savvy. I have hired a financial coach for my business and also as a family, we have a new financial advisor to help us plan the future, as I am now one year off 50! The question we keep asking is, how can we make sure we are investing in something that has a good chance of succeeding? The answer is there is never such a thing as a sure investment, but what you can do is make it as likely as possible that you are going to succeed overall. A good way to do that is to take the time to ask yourself the following four questions before you invest in any specific item. This should help you to make the wisest moves whether you are investing for retirement or to buy your first home.
Can I Afford To Lose This Money?
The most important thing you should always ask yourself is whether or not you can afford to lose the money that you are thinking of investing. After all, if you think you might be in trouble from losing the money you put in, then it is far too risky an option to follow through with. You should only ever invest money that you are certain you could live without. That means that even if the investment falls through, you will be able to pay your bills, buy your food, put money away into your savings or emergency fund, and live comfortably. If you are not sure, quite simply: don’t invest.
How Much Risk Can I Take?
Beyond that, you need to also just work out what your own personal risk appetite is. This is a term which just simply relates to a feeling of how risky you are prepared to be with your investments, and it is just a personal taste thing that nobody else can inform you about. It’s all about how you feel about investing in general, and investing in something in particular. Ask yourself whether it is above your risk appetite or not. If it is, just don’t go for it, and stay safe.
Is This Investment Secure?
There are obviously different levels of security and risk to different investments, and you need to think about what you are going to accept as too risky, as we saw above. But whether or not something is risky, you also want to think about whether it is secure. In other words, does it generally at least bring a fair return, such as when you buy gold coins or silver bullion, or is it much more of a fluctuation, such as investing in cryptocurrencies or shares?
What Are My Goals?
It’s best not to merely invest blindly without any goals. Instead, you should think about what you want your goals to be, and then you have a yardstick that you can compare to whenever you are trying to invest more money. You might want to make a certain amount in a year, for instance. However you approach this, it’s important that you are doing whatever you can to secure goals that make sense for you and work within your plans. Do that, and the whole investment procedure is going to be a lot more secure.
I hope that this has helped. I am passionate that as women, we need to be financially secure. We need to have a robust plan on how to do this but you need to start with these questions.
(This is a collaborative post)