Are you new to investing and not sure the best way to go about it? Have you heard people talk about their investment portfolios but are unsure how to go about building one of your own? It is important to consider your retirement, how you will get by when that time comes and what you can do now to build wealth. It’s also important to start as young as possible for the greatest results, there is also a chance you may want or need wealth in your life before then.
There are a number of strategies that will help to manage risk when investing and three key points to follow to ensure you build a sound portfolio.
- Choose quality assets
- Choose income producing assets
- Asset allocation
Quality assets include blue-ribbon property and blue chip shares. Income assets generally produce sustainable income, for example cash and fixed interest investments. Asset allocation means dividing your investment money into the different asset classes of property, shares, fixed interest and cash, by doing this you balance the return and risk potential.
Consider where you’re at with the time you have to invest, this will give you an indication as to whether you should aim to invest in areas that will grow your money or preserve it. Different investments will deliver their returns over different time frames, property takes longer to achieve capital gains than shares which may also return dividends. Shares however are more volatile than property and often need to be held over a long timeframe to ride out the volatility.
If you are looking at building a portfolio to fund your retirement it’s a good idea to look at a period of 15 to 20 years giving plenty of time for growth and overcoming volatility, depending on cycles of course. Returns on shares and property over the longer term are usually higher than cash or fixed interest accounts but they also carry more risk. Past performance of any investment is only an indicator and although it can be studied and taken into account you should not rely on it as your only means of assessing an investments potential.
There are a number of educational methods available to you for learning about investing in the 21st Century, books like Rich Dad, Poor Dad, By Robert Kiyosaki and What I Didn’t Learn at School but Wish I Had by Jamie McIntyre as well as Dvd’s and seminars that can give some solid foundations for getting started. There is no better time than now to get started if you haven’t done so already.
Power Thought
I am financially independant and free
Write this down where you will see it and read it often
Cheers
Teresa and the Team at
