9 Things to Do Before Making a Financial Investment


Investing your finances

Making a financial investment sounds like a very wise and savvy thing to do but you aren’t sure what you are investing in or what you are actually doing, then it can be a huge risk in your wealth management. Here are a few things to consider before you begin making any final decisions regarding financial investment.

  1. Decide on Some Goals
    Before you make any decisions, you should take a moment and really look at your whole financial situation and make a plan. The first thing you want to do is figure out your goals and how much you are willing to risk. The thing about financial investment is that it holds no guarantee to making more money. However, a good plan or goal should help to gain some security.

  2. Evaluate the Risk Factor
    If you are going to be purchasing securities like stocks or bonds then you need to understand that there is a potential to lose everything. If you deposit your money into FDIC insured banks or credit unions, that is less of a risk but less of a benefit as well if things to your way. The bigger the risk you make in your financial investment, the bigger the potential investment return so it can be a difficult decision to make.

  3. Consider Mixing Investments
    It can be a good idea to invest in several different areas instead of throwing all of your money into one area. This way, if one asset fails, then you still have the other to lean on in hopes of a better return. Also, long term goals will need to include some sort of stock mutual funds in your portfolio but if you aren’t comfortable investing it all there then you should probably mix it up.

  4. Create an Emergency Fund
    Smart investors put money in savings in order to take care of any emergencies that come up. Sudden unemployment, car repairs or other big spending requirements sometimes come up and if all of your money is tied up in investments before you receive your return, then you will be stuck.

  5. Pay Off Debt
    There really no point in investing your money if you are still in high interest debt. The best thing that you can do in any market condition is to pay off the entire balance of high interest debt as quickly as you can. This is the wisest first step in a financial plan.

  6. Take the Free Money
    Many jobs offer retirement plans that match your contributions. If your job offers this then make sure you are taking full advantage of the opportunity so that you save as much as you can in your retirement fund. Try to avoid borrowing from your retirement fund as there are high fees and penalties included in doing something like that. And then of course, if you don’t replace the funds then you will have less for retirement.

  7. Balance and Re-balance Your Portfolio
    It’s important to remember to bring your portfolio back to the front of you mind on occasion and make sure that it does not over emphasize any one asset. Your portfolio should always be a balanced mix that leave you a comfortable level of risk. You can do this on a calendar basis; for example, once a year. Or, you can wait for your investments to tell you when to re-balance.

  8. Avoid Falling Prey to Fraud
    Fraudulent activity includes scammers using the headlines to find a highly publicized item in order to make their opportunity sound legit to any potential investors that seem interested. Also ask questions and check the answers with other sources before you agree to invest with an unknown.

  9. Talk to a Financial Adviser
    This should really be number one. Once you decide that you want to make financial investments or that you need a financial plan, your best bet is to talk to an expert in the first. Financial advisers and counselors can guide you in the right direction and help you to make wise decisions regarding your money and financial goals. It can be hard to decide these things by yourself because of the risk factor but it’s the job of the adviser to keep up with the changing laws and ideas which will assist you a lot when decision time comes.

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