Percentage in Point

Posted: 13 Aug 2010 09:25 PM PDT

Before investing you should consider the following basics. These basics will help you make a better investment choice.

1.Invest with a purpose or goal in mind:

The obvious reason for a person to invest in something is to make money. But there is always a purpose behind investing and making money. Some common purposes are, to fund retirement, funding college, funding a tour or travelling etc. when you know what goals you have for your investment, it will help you choose the right type of investment to make.

2.Determine what kind of investor you are:

You will now have to determine whether to go for a stable investment which has slower gains over a long period of time but is safer or go for a high risk investment that will provide higher gains over a shorter period but also have chances of loss. Determining your time frame will help you decide on the type of investment to go for, for e.g. if you are investing for a short term goal which is five years or less, you should go for investments with lower risks. If your goal is long term investment then you should go for an investment with a greater risk and higher reward.

3.Avoid going for investments with big promises:

You should avoid going for investments that promise to make you a lot of money is a very short period or overnight. These can be scams or involve a very high level of risk. So, don't get fooled in jumping into such investments.

4. Diversify your investment:

You should not invest all your money in just one place, you should spread your investment around using different classes of assests. By diversifying your investment you reduce the risk of loss. If one of your investments was to perform badly, you could still benefit from the others.

5. Don't neglect your investment:

You should keep tabs on your investment and how it's performing. You should at least check your quarterly statements and review your investment on a semi regular basis. If you see that your investment is performing poorly then you should invest your money somewhere else.

6. Remind yourself of the purpose you set:

Don't let the short term results of your investment derail you from the goals you set before investing. It is essential that you remind yourself of the original purpose of your investment. Never invest in anything with your emotions running high, you will just end up making a bad investment by investing in something risky.

Having knowledge of the basics of investment will help you make a better investment choice and help you to get a better return in the long run.

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