When you are faced with the decision to choose the best investment to go for, there are always variations, and there isn’t one that will work for everyone. Everyone has his own way, and circumstances that influence his or her saving goals and these are the determining factor on how to find good investments. In this article, we take a look at the five important steps to take into account when considering the best investment for you.
1. The amount to put on an investment
The amount of money you have available is a key factor on the type of investment you can bet on. If you have a large sum of money, you might decide to invest all of it in certain types of assets such as property or corporate bonds. This may not be the same for individuals looking to invest based on regular contributions and may be favored by investments such as stocks or short-term equity funds.
2. Duration of Investment
How soon do you want to get your capital back? Investments have different timelines before they mature. Unless you are a professional trader able to do short selling, investments such as stocks shouldn’t be considered as short term. There are other investment options however that may guarantee a return of your initial investment quickly such as short-term bonds, which are also very rare to find.
3. Plans for the investment yield
If you are looking to purchase a new house or take a family vacation from your investment yields, then short-term investments with certainty about return on investment may be right for you. You may, therefore, be inclined to go for short-term investments with lower risks. This may not be the case if you don’t have any short-term need for the yields and therefore opting for a long-term investment is a valid consideration.
4. Is your investment your source of income?
Investments such as pension funds are best known to provide a source of income for retirement. When looking for an investment that is going to generate regular income, your choice of product will be of greater influence. Buy-to-let property or corporate bond funds are some of the investment products that you may consider for annuities or other forms of regular income.
5. Your Age
Your age changes the attitude you have towards risk on investments. Higher risk investments that offer long-term options may be more appealing to younger investors than to someone who is about to go to retirement. As the retirement age approaches, the approach of how to find good investments favors lower-risk products.