Question

List 3 key components you would consider in making an investment decision. What sources and factors would you review?

Answer 1

Before you make any investing decision, sit down and take an honest look at your entire Financial situation. First step to successful investing figuring out your goal and risk tolerance either on your own or with the help of Financial professionals. There is no guarantee that you will make money from your investment. But if you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain Financial security over the years and enjoy the benefits of Managing your money. Before you make any decision, consider these area of importance:
A.   All investment involves some degree of risk. If you intend to invest, it is important that you understand before you invest that you could lose some or all of your money.
B.   Asset allocation is important because it has major impact on whether you meet Financial goal. Historically , the returns of three major asset categories- stock, bonds, and cash have not moved up and down at same time.
C.   Make plan to get rid of debt at earliest, if you have any. If investor manages to generate a return of say, 12% per annum from one investment portfolio but pays a similar percentage as interest towards loan, the net effect is not helping him create wealth.
D.   Even before investing make sure your assets , health cost and house you live in are well protected. And this is best met through the risk management toll called insurance.
E.   Unless one has a proper emergency fund in place, starting to invest in long term goals in futile. Emergency situation arrives uninformed and also need immediate action.