When starting your investment journey, there are many things to consider. This month we are talking about risk and tolerance to risk. We have put together some of our top tips for getting prepared for Investment.
Do consider your age:
This is probably the most important factor as it will give an idea of how long you will be investing for and this will indicate the risk you may be able to take. For example, younger people have a long time to go before retirement therefore they have more time to invest and will be willing to ride out the highs and lows of the markets in the pursuit of long term investments. However, the older adult may not wish to take such high risk where the possibility or probability of losses is present in the short term.
Do ask yourself why you are investing:
If you have lots of time ahead of you and currently have money to spare which isn't being used for things like a mortgage, children or other finances, then you may be willing you take higher risks. However, if the money you are looking to invest is for children's tuition fees, marriage funds or similar, it may not be wise to use that capital for high risk investments where in the short term could lead to a loss in the value of your investments, meaning you may not necessarily get back the amount you invested.
Do take time to consider your options:
Compare setup and ongoing fees. Make sure you understand how these work. Companies vary in their offering and fees, so take time to understand and compare these. You can learn all about our rates here.
Do consider how you would like to monitor your investments:
If you like keeping on top of finances and look at your bank account regularly, you may want to consider an investment company which allows you logins or apps to track your investments. If this is not you, you will always receive an annual statement, which for many takes out the constant worry of tracking these in the ever busy life we lead.
Do take time to read and understand the Key Investor Information Documents on each fund:
Otherwise known as KIIDs, they will provide information on objective and summary of the fund, risk and reward profile, charges and past performance as well as practical information. Find ours here along with annual report and factsheets.
Don't be influenced by what your friends and family are doing or telling you:
The risk that you take must be right for you and all hypothetical situations should be considered before making a decision.
Don't let your emotions get the better of you:
Just like some particular investments, emotions are volatile and may lead you into making incorrect decisions. We recently spoke about how to identify the emotional investor and the consequences that this had on their investments. You can read it here.
Don't forget:
That once your portfolio is up and running, it's not set in stone and you can make changes as and when you like.
If you would like further information about how we can help you here at Elson, contact us today on 0800 0961111 to speak to one of our team or email us on info@elsonassociates.com. Elson Associates - Investment Management Services UK.
It is important to remember that Elson Associates do not provide advice on the suitability of investments, if you require this service then we recommend you seek expert advice. Remember that the value of your investments may go down as well as up and you may not necessarily get back the money you invested.