5 Things To Do Before Investing

(Photo: Guul Group)

Congratulations, you have decided that you finally want to take the plunge into investing.  You save enough money to start investing. But remember, this is your hard-earned money and whatever investment you want to do will definitely have its own share of risk.  

Let’s look at this 5 things that you need to ensure you have in place before taking the next step.

Level of Involvement

It is very important to know how much or little you'd like yourself get involved.  Do you want to do the investment part-time or full-time?  

If you have the time to do it all, you can solely responsible for all the activities needed in investing.  You can also find a partner to share the responsibilities and seed money to start-up an investment. You may also consider being an angel investor 

For example, you may only want to be an angel investor where you provide the start-up capital to an investment.  As an angel investor, you are given shares of the investment and be part of decision-making.

Time Frame

How long do you want to keep the investment?  Success stories do not happen overnight.  Even you are a long-term investor, it is very important to know the length of time you want to do and keep the investment.  You will need to evaluate your expectations from such investment.  The return of investment must be foreseen by anyone who wants to enter in investing.

Return of Investment

In any investment, the return of investment must be foreseen by anyone who wants to enter the world of investing.  Expecting a 10%, 20%, 30% annually is normal to know if such investment is worthy of your time.  This is where market research and feasibility studies come in handy. Again, returns depend on the type of investment.

Diversification

To maximize earning, investor must strike a balance between the goal and its risk.  Diversifying is to spread out the risk to create a solid portfolio. In stock investing, spreading the risk thinly could mean money loss.  More money wouldn't necessarily mean more earning.

 Exit Strategy

In any kind of investment, there is no assurance that you will reach the goal even if you fulfill every step of the way.  Exit strategy is a requirement in any investment. One must know when to tell enough is enough. As an investor you must be clear when you want to withdraw your money and how you can do it.

Investing is a very good opportunity for you to grow your money. But getting into investment is not a walk in the park. As an investor, it's your responsibility to know the facts and learn the way around it to be successful.  What looks good on paper may not look good in reality if you become careless with your investment.

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