The Guide to Investing: Part 1

Sarang Ahuja’s latest post:

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When it comes to investing, you need to be practical about your goals and the overall situation. This is not a simple get-rich-quick scheme. Instead, it requires a lot of due diligence in finance and financial management. This type of control with your personal finance is something that can benefit you in the long run. But make no mistake; making smart and strategic investments requires quite a bit of effort and research, especially without the advice of a professional expert.

Now you do not have to be an expert to invest in a company or a stock. While you can hire a professional like a financial advisor to do the grunt work for you, all you truly need to understand is what investing is, what it means, and how time itself is the factor that earns money through compounding. To help you in your efforts, try and buy quick tutorial books on investing or visit sites like Investopedia.com that review the basics and foundations of investment strategy. I would still advise you to seek additional help from a friend or a professional. The more knowledge you are able to amass, the better you are able to reach your personal financial goals.

Now when it comes to investing, there are a couple of things you should try and avoid. First and foremost, you need to be tangible and realistic about the overall timeline in reaching your personal financial goals. Expecting too much or using someone else’s expectations can often times derail both your morale and your financial plan. Like it or not, the simple act of investing cannot immediately solve your problems in a short period of time. As stated above, time will be the sole factor in how lucrative your return will be in the future. To help alleviate this problem, try not to set unrealistic expectations. Instead, base your projects on past investors and their financial returns (and financial loses). This will allow you to holistically view every situation possible in bettering your portfolio for the future.

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Going off of realistic expectations, it is absolutely vital that you have tangible investment goals. For most people, this isn’t an issue. Their goal with investing is to have an overall stable income in their retirement saving account to help aid and supplement their personal savings and additional funding from their Social Security. Most people usually work towards that as a real goal. The tricky portion to investing besides picking their investment opportunity are the actual figures and targeted-date that you want to see your funds grow throughout your portfolio. Start by asking yourself a variety of questions: Are you looking to save $2000.00 a month? Are you looking to have $50,000 saved by the end of the year? Whatever is the case, make sure you are clear about your short-term financial goals. While this may be tedious and downright stressful, setting these small foundational targets will help you view your financial plan in a more strategic and holistic manner. This will, in turn, allow you to strategize the best course of action when moving on with your investments.

Once your goals are set, make sure you are reviewing your investment plans regularly. For many successful investors, they set a time within the month (or week) to talk, discuss, and analyze the performance of their portfolio, especially when there are other moving factors and different investments involved. Make sure you are like one of these investors. Keep track of your portfolio and adjust your contributions to keep things in balance. The worst thing you can do for yourself is to assume everything is great. Be cautious and strategic.

Now to enhance your investment portfolio, you want to make sure you are diversifying enough of your assets in different places. You have probably heard the infamous childhood phrase of “Not putting all your eggs in one basket.” Similar to this statement, you want to make sure you are diversifying your portfolio. Diversification, in investments, simply means spreading your money across a variety of different opportunities. Ideally, you want to spread your assets in the following: cash, bonds, stock, real estate, precious metals, collectables, etc. Whatever is the case, diversification allows you to protect your assets from any changes within the market. This will allow you to keep your financial future intact, while also providing any financial security in case anything goes wrong. As much as you want to be cautious with your money, you also want to take a risk. Remember, it all comes down to the homework you do for each financial opportunity. Nothing is ever a sure thing. But it doesn’t hurt to have the odds in your favor.

from Sarang Ahuja | Finance http://ift.tt/1T8j2Sf

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