5 Important Facts You Need To Know About Investing

Investing isn’t something that comes naturally. It’s not like riding a bike. The reality is that the language of investing is often obscure and the rules and regulations can be complicated. But, investing is the best way that we know to build your financial future.

Take a look at the following 5 important facts you need to know about investing for financial….

1. Draw a personal financial roadmap

Before you make any investing decision, sit down and take an honest look at your entire financial situation — especially if you’ve never made a financial plan before. The first step to successful investing is figuring out your goals and risk tolerance – either on your own or with the help of a financial professional.

2. Start Early

ou have get into the investing game early. The main reason you need to have healthy financial habits in your 20’s is that time is a huge factor in how your investments will grow. Even if you only have a small amount of money to invest, time takes care of this. These days there are options available for small investors. You can start a portfolio with as little as R5!

3. Don’t put all your eggs in one basket

To minimise the chances that market volatility could result in the loss of your retirement investment, it is important to put your money in several investments with different levels of risk and potential return. Diversification protects your investment portfolio from being too vulnerable to the ups and downs of a particular investment or investment category. It’s a key strategy for reducing risk.

4. Don’t underestimate your life expectancy

With fewer available resources, women’s financial security is at risk. This may not be a popular way of thinking but it’s advisable to have a savings plan outside of your marriage and not be 100% reliable on your spouse. What this point also refers to is diversification from only having joint accounts with your spouse – you don’t know what will happen, so it’s always worthwhile to have some investments in your own name.

5. It’s a risk

The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you are likely to make more money by carefully investing in asset categories with greater risk, like stocks or bonds, rather than restricting your investments to assets with less risk, like cash equivalents. On the other hand, investing solely in cash investments may be appropriate for short-term financial goals