Although undervalued assets have been hard to come by in recent years, this might not be the case for much longer, with major economies expected to raise interest rates soon. As a result, more and more people are exploring the idea of investing their money in everything from stocks and shares to bonds and property.
In many respects, it has never been easier to ‘play’ the stock market or exchange foreign currencies, as renowned industry names such as IG have developed user-friendly and fully interactive platforms that enable anyone to trade. What’s more, you can receive ongoing support and expert insight on the current market conditions from locally based financial professionals. The markets are no longer obscure, hidden and indecipherable.
But before capitalising on this kind of opportunity, here is everything you need to know about investing in today’s economic climate.
Look at your financial situation
If you have never invested before, it makes sense to draw a financial roadmap that details your situation. By doing this, you can figure out your monetary goals and risk tolerance. After all, there is no guarantee that you will earn a profit from your investments – certainly not right way.
Think about your investing comfort zone and how much you are willing to lose. Risky securities such as stocks and bonds have greater return potential, but if you have very specific long-term financial objectives in mind, it might be best to choose safer cash equivalents instead.
Consider diversifying your investments
To protect yourself against significant losses, you should think about dividing your money up between different types of investments and asset classes. These days, you can never be sure how economics, politics, and other influences will affect the world’s financial markets.
With money in more than one investment and asset class, you will reduce the risk of losing money and your portfolio returns can enjoy a much smoother ride. You also benefit from the ability to counteract any loses in one category with better investment returns in another.
Understand taxes and fees
It is of critical importance that you don’t overlook the effect that taxes can have on your investments. Although a financial adviser or broker can explain the tax implications of your investments, up-to-date information is available on the government’s website.
But if you do go through an adviser or broker for your investments, be aware of embedded and commission fees. These are typically charged for advice and/or investment management on the overall portfolio.
Bide your time and be patient
Despite the fact international markets can rise and fall at a moment’s notice, this doesn’t mean to say you will become a millionaire overnight. All investments require commitment, caution, and a willingness to learn, so dismiss any preconceived ideas that this is a way of getting rich quick. This is not a game – it’s a long-term commitment that can reap rewards.
If you are concerned about the performance of your investments or believe there is too much risk involved, you can always get help and guidance from a qualified professional. You need to feel comfortable with your investment portfolio to avoid making rash decisions or silly mistakes.