Our parents rightfully said that it’s easy to spend money that we don’t earn ourselves. That’s why we tend to burn through our weekly allowance in a matter of days. Now that you’re in one of the most important decisions in your life, how are you holding up? When it comes to choosing the right investment to go for, selecting a one-size-fits-all approach often ends up damaging your finances.
Let’s take a look at some tactics you need to know before you can answer the question ‘what is the best investment for me?’
How much are you willing to invest? Do you want to invest a lump investment, or to set aside a portion of your monthly salary? Maybe a short-term investment or longer? Most importantly, how much money do you currently have?
Some assets require you to pay a lump sum investment, such as corporate bonds or buying a property. Providers like NPBS have fixed rate home loans that make property investments easier to get, suitable for residential investors who want a fixed interest rate with loads of features and no ongoing fees. Properties can then either be rented out or flipped for faster ROI.
Other types of investment offer the flexibility of either a regular contribution or a lump sum, such as stocks and shares. Some investments also practice a minimum financial commitment, so knowing what you can afford and whether you can stick through it or not is a good starting point.
How long are you willing to invest? Or stated another way – when will you need to get your money? Some investment products run for a fixed period of time, which impacts the time when you can access your money. If you have a specific date in mind as to when you have to access your capital, then look at the type of investment you’re going for. Investments, such as shares shouldn’t be considered as a short-term investment option.
What are you planning to do with the money? Everyone has a reason for saving, and the purpose of your investment will affect how much risk you are willing to take with your capital. If your investment is targeted towards your children’s education, then you should invest over a long period of time, and look for a higher return, subsequently you need to choose a higher-risk investment option.
On the other hand, if you are investing money to finance a new car, or an overseas trip, you may want to invest for a short period of time and want confidence that your investment will be returned with bonuses. You should utilize lower risk short-term investments.
Will you need an income from your investment? Expecting an income from your investment will influence your choice of product. The best-known investment vehicle for receiving an income in retirement is a pension.
Other investment products that also provide regular income are annuities, or corporate bond funds. You may also choose to invest in a buy-to-let property to give you a steady stream of rental income.
There you have it! As a first time investor, I also suggest that you seek professional advice first before engaging in any products, as most of them require a huge commitment. Best of luck!