When it comes to investing, there are a few basic principles that you need to consider:
» Define your Goals
You need to know what you want to achieve, when you want to achieve this by, and have an understanding of the current markets.
The old saying comes to mind "if you fail to plan, then plan to fail". Set your plan in place, and then stick to it. There will be times when markets fall, and so too can your investment values, but more often than not, the ups are more common than the downs.
» Know your investment profile.
The greater the return, the greater the risk. Not to say that risk is bad, as over the longer term, a more aggressive portfolio has the potential to do better, but it all needs to be in proportion to suit YOU, the investor. Volatility is measured in time frames as well as ups and downs - the trick is to get the right mix.
No point driving a V8 if you are more comfortable in a mini - same concept with investing.
» Diversification
Have you heard the saying " Don't put all your eggs in the one basket". By spreading your money over different investments (or asset classes), you create a more stable environment. As one asset is down, others may be stable or up.
Diversification comes in different areas:
Regular Investing
Put away small amounts regularly rather than save up and invest lump sums - this is called "dollar cost averaging".
It works over time and we can show you how!
Time in the market
This industry is full of cliché's - "it is not timing the market, but time in the market". History has shown that over time, the markets (including all the main asset classes) typically trend upwards. This goes on to say that the more volatile the market, the greater the potential for higher returns on your investment over the long term.
Stay Invested
This is why understanding your investment timeframe and your risk profile are important.