Choosing an investment strategy can seem like a daunting prospect. There are many factors to consider and so many different ways you can go about investing your money. Should you put it into stocks, bonds, currencies or CFDs? How will you manage your investments once they’ve been made? What are the risks, and when should you expect a return? Happily, there are clear steps you can take in order to work out a strategy that’s right for you, and many good sources of expert advice along the way.
The first thing to realize is that there really is no one-size-fits-all solution to the question of what investing strategy to go for. Everyone is different, and everyone has different goals, requirements, and attitudes. You need to work out for yourself what you want from your investments and what your level of risk tolerance is.
All investments carry a degree of risk, meaning that there’s a chance that you could lose money as well as make it. Some investments are riskier than others, but the catch is that risky investments are also the ones that have the most chance of making big profits. Finding the balance between potential profits and the chance of losing the money you started with is what is meant by establishing your risk tolerance. This really does depend on your personal temperament, and there is no one right answer.
A diverse portfolio
The best way to safeguard against risk while still giving yourself a chance to make significant gains is to have a diverse portfolio that includes some higher-risk investments alongside safer ones. Again, you need to decide what the balance will be. A combination of stocks, bonds, and cash should give you good coverage and liquidity, and you should also invest across different countries and sectors so that a downturn one area will be compensated for by others.
Choose your broker
Finding a good investment broker who understands your needs and requirements is a major step towards getting your strategy in order. These broker reviews from Learn CFDs can help you to decide on a broker who can help you to put a portfolio together, make investments and advise you on managing them.
Timing is everything
A major factor in deciding your investment strategy is timescale. If you’re in your twenties and making investments in order to cover your retirement then good on you for planning ahead, but you’ll want a different strategy to someone who wants a steady income from their investments in the immediate future. Thinking about how long you want your investments to last is important as in some cases your money could be locked in and inaccessible for five, ten or even 20 years.
Whatever approach you take to be sure to read the small print and to look out for any hidden charges or restrictions that may prevent you from getting to your money when you need it. Every investment strategy will be different, and a good broker can help you to draw up a bespoke plan to ensure you reach your goals.