What should I buy? When should I buy? When should I sell? Will this investment help me to reach my goal? Do you ask yourself all those questions before you make an investment decision? Don’t you wish you could just invest in anything, leave and then bam…you’re rich? I do too, but that’s not how it works.
Here are 5 things you should consider before you make that investment decision:
- Your Goal – What are you investing towards? Retirement, A Home, Children’s College Tuition or just to make your money. Based on your goal, the type of investment you chose, strategy and tenure will vary. For example, if you are investing towards retirement, I recommend looking at Blue-chip stocks in various sectors for diversification and some long-term bonds. Looking to buy a home, well we can take a little more risk, let’s get some growth stocks in that portfolio, take some gains and reinvest.
- The Market – These markets, well the US market had been quite volatile stemming from the increase in interest rate, Russia/Ukraine War, and inflation. It seems investors are jittery and aren’t sure what the future holds. However, as I teach in my classes, there is always an opportunity in a volatile time. Remember we don’t chase stocks we buy quality stocks at quality prices.
To answer one of the questions above, do you buy when prices are high, absolutely not, do you sell when prices are high, heck yeah! That is where you take some of your gains.
- Your Time Horizon – How long can you leave the money, I like to take a long-term approach, 3-5 years. However, we can also do short–term trades when seeing opportunities. Now with short–term trades, you must pay attention, to the reports. Hello earnings season. Do you expect the company to report strong revenue? Well if that is the case, there may be an uptick in the price, so get in low and get out high. I will caution you here, with short-term trades you must pay keen attention to the market. You can earn that extra money, but you can also lose a lot too.
- Your Risk Tolerance – Investing can make loads of money, but you can also lose money. So when making an investment decision, never go in because of emotion. Be logical, research the company or investment that you are looking at, does that company show strong revenue growth over a period, do they have a strong management team, and how does their cash look? What about debt? Investors who have a higher risk appetite can go for higher-risk investments, which typically yield higher returns, but investors who can’t stomach the risk should go for lower-risk options. A rule of thumb in investing is to not invest what you cannot lose.
- Know when to exit – Sometimes with investing and you see your gains, it’s tempting to get “greedy”, I mean who doesn’t want more money. But you should always set an exit markup. Go in knowing how much return you want to make. Once you hit it, take your gains.
I can teach you how to do short-term and long-term trades dependent on your investment goal and your risk appetite. Ready to get started? Jump on a call with me and Start Your Journey and come join me on the Money Side.