Let’s say you have a lump sum sitting in your bank account that you would like to invest, with the hopes of making a profit…what should a first-time investor consider when deciding on if and where to invest it? How much risk are you comfortable with?
- Would you be more likely to choose high risk for potential high return investments, or an investment with the lowest potential loss?
- Are you cautious or carefree when it comes to making financial decisions?
- Are you quick to react to media or market changes?
Some tips to help with your investment decisions;
- Invest with a regulated company: A company regulated by the Central Bank of Ireland must always act in the best interests of consumers and comply with strict rules that help protect consumers. Your financial advisor will also be able to guide you in choosing a company and with assessing your needs.
- Diversification: Spread your risk across several types of asset classes and sectors to avoid putting all of your eggs in one basket.
- Consider volatility: Certain assets are more volatile than others. If you only invest in a single asset type (such as individual shares) you are more exposed to changes in market value for that asset type. This can demand a lot of your time to monitor the market and use your judgement as to when to sell.
- Choose a managed fund: You’ll have an expert investment manager at the lead who is knowledgeable about what assets across which sectors to mix, and who is actively monitoring performance and responding to market movements and opportunities.
What does return on investment mean?
A return on your investment is the potential amount you could gain or lose. A return can be positive where you gain money over the amount you have invested. Or a return can be negative where you lose money you invested. It’s important to know that unless there is a capital protection guaranteed, most investments are not protected, and you could lose some or all of the money you invested. No one can predict what is going to happen with the market. However, it is a good idea to leave the money you’ve invested alone for a while and a recommended duration of at least 5 years can give your investment a suitable time to perform.
Visit www.drumgoolebrokerage.ie or #JustCallOran on 087 6686624.
Wishing good health and a very Merry Christmas to all readers of the Meath Coaster from Drumgoole Financial Services