Posted on: 12-01-2021 in Investments
What are the three things you need to consider before investing? Buying a house, planning your child’s education or preparing a retirement plan are just some of the financial problems that an adult would have to solve in the course of his life. Unfortunately, most people’s salaries are not large enough to cover those needs as they are not adequate, and every costly purchase requires budgeting.
One of the ways to increase the available income is investing. Investing is the act of committing money or capital to an endeavour, expecting that an additional income or profit will be obtained. However, investing doesn’t, in any case, guarantee that an extra income will be always available as the market’s fluctuations can work in favour of an investment, but also against it, resulting in the loss of the invested capital. In order to avoid a potential loss of funds, investors should take into consideration certain things that would allow them to better prepare against market volatility.
Every plan in life should have a set of goals, and an investment plan isn’t an exception to the rule. However, it’s not a rare situation to have people investing in various shares, bonds and other securities without a clear target or strategy. Investors that would like to achieve their goals should think beforehand what they want from an investment plan and which course of action would be more appropriate to get closer to the desired result.
Goals could be short-term, medium-term or long term according to investors’ needs, and they are always an essential part of an investment plan. If you don’t have the necessary skills to invest, read how you can choose the right financial adviser that would help you achieve your financial goals.
One of the things that should be realised before starting to invest is that investment involves risk. Risk is something that most people would like to avoid, but investors should be ready to face the consequences if the market moves against them. That’s why, before investing, investors should decide how much market volatility they could stand if the market falls.
Experienced investors know that it’s preferable to have a realistic understanding of their ability and willingness to withstand large swings in the value of their investments. Seasoned investors also note that there is a thin line between risk tolerance and risk capability that beginner investors should consider when planning their strategies.
Warren Buffett, one of the most famous investors in global markets, has said in the past that “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This quote, coming from an investor whose net value according to Forbes’ list of billionaires has reached $87.1bn, is of special importance.
Warren Buffett has repeatedly advised investors to scan the market thoroughly and be focused on shares of firms that they are thoroughly informed about. Investing in firms that look attractive without knowing the right kind of data could result in capital loss. If you believe that you need professional advice, a financial adviser can help you with complex financial products and provide that extra help you need on your journey towards financial freedom.
At Holborn Assets, we carry the requisite experience and expertise to help you identify which types of investments make sense for you and if so, to help you get started with your investment drive. Get in touch with our qualified independent financial advisers today.