Taking plunge into investments

14th October: Before starting making investments, you need to keep a few things in mind to become a successful investor.

Once you have money to invest and you have made a decision to take a plunge into investment, you need to follow a few guidelines or steps to help you become successful investor.

Let’s see these useful investment guidelines—

• Know your needs—While making any decision about investments, you must take into consideration how much money you need to keep liquid so as to be able to access it instantly. And how are you likely going to withdraw it? Keep in mind that some of the investments including savings accounts are more liquid than others like bonds. And don’t forget to consider your financial position before plunging into investments.

• Know your investment targets—This is yet another important factor to be borne in mind for any potential investor. You must know your investment target. Do you need investment to provide funds to your retirement, fund your child’s college education or your next vacation? Its only after these considerations that you can take an appropriate decision with regard to investment.

• Passive or active investor—You can be an active investor if you have sufficient time to study changing trends of the market. You can be a passive investor who is interested in investing in diversified stock portfolios. The choice is entirely yours keeping in view your individual priorities.

• Know different type of investment accounts—You must have knowledge about various categories of investment accounts. Remember, money market accounts are entirely different from mutual funds. And a good investor always spreads his money or wealth among different types of accounts rather than putting all your eggs in one basket.

• Know your risk tolerance—After indentifying your targets, you need to know your risk tolerance. The rule of thumb is that higher risk means higher returns and vice versa. If you have made up your mind to invest in stock markets, you need to be strong enough to tolerate the ups and downs of market with equal ease.

• Seeking services of financial advisor or an online broker—Using services of an experienced online broker or a financial advisor can prove to be of great help in becoming a successful investor.

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