Five Things to Consider Before Making Investment Decisions

Recent financial market events have created increased attention on investment. You may have even been thinking to yourself - is this the right time for me to invest?  Before you put your hard-earned money into an investment vehicle, here are some things to consider.

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Evaluate your current financial health

The first step to successful investing is making sure you are in a healthy financial position and that you understand how much money you are able to invest. Take an honest look at your entire financial situation; assess your net worth, savings, income to debt ratio, financial goals and lifestyle - you can do this on your own or with the help of a financial professional

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Define your investment goals and plan your investment strategy

Think about what you’d like to achieve by investing. Once you have your investment goals in place, you will be able to plan an investment strategy that will help guide you on how and when you can achieve those goals. There's no denying that investing can be emotional, so having a plan can assist you to recognise when your emotions are influencing your investment decisions.

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Understand your risk appetite

It's important to consider your investment goals and how much risk you’re prepared to take on to get there. If you have a financial goal that is centred on long- term investment, you are more likely to be investing in asset classes with greater risk, like stocks. For short-term investment goals you may be investing in cash equivalents like high-yield savings accounts and bonds. All investments involve some degree of risk and it's crucial you understand that there is no guarantee that you’ll make any money from your investments.

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Think about where you want to invest and how

Your investment strategy, goals and personal values can help you determine which investments are suitable for you. There are a lot of ways you can go about investing your money depending on your level of confidence and whether you want to take a passive or active approach to managing your money.

You can choose to diversify your asset portfolio by having a mix of asset classes such as cash, shares and bonds. Or you could choose to invest your money in a single asset, such as a property. Just remember there is no perfect decision when it comes to investment, every choice has its pros and cons. Focus on doing what is best for you!

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Research

It is crucial you take the time to research your options to make an informed investment decision. It is time-consuming, but it is an investment in investing!

Depending on your preferred type of investment, you could start by looking at a product disclosure statement if you are thinking of opening a high yield savings account. Or if you are looking to invest in the stock market, you could start by looking at the organisation's annual reports and other financial documents.

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Key takeaway

There is no doubt that investing can be a great way to grow your wealth and secure your financial future but remember there are no guarantees in the investing world.

By taking the time to understand your financial position, make informed decisions and understand what’s happening in the market through research, you can reduce some of your investment risk and set yourself up for financial success.

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* The information provided in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances and consider seeking professional advice.

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