Fundamentals of Investing
It is important that consumers take the time to learn basic investing principles to understand how their investments can benefit their financial future.
ACCC explains the fundamentals of investing:
1. Set goals
Before investing, write down your goals, both short-term (up to 5 years in the future) and long-term (more than 5 years in the future).
2. Assess risk tolerance
The higher the risk of an investment, the greater the return, but that also means there is a higher chance that you could lose your money.
3. Decide how much to invest
This depends on your goals and when you would like to reach them. First-timers might consider investing about $100 per month and increasing as they get more comfortable.
4. Decide on the kind of investment
Investment options include bonds, stocks, mutual funds, retirement, education, real estate, etc. Understand all the options and the risks they carry.
Don’t put all your eggs in one basket. Consider diversifying between stocks, bonds, etc. to spread out your risk.
6. Be disciplined
Stick to your investment strategy and focus on the long-term outlook, rather than making drastic changes based on the current economic climate.