Investing your life savings is a big responsibility and one that you should not take lightly. If you are working hard for your money, then investing is there to help your money work hard for you. By being smart you can secure your and your family's financial future and make sure that you have a great retirement. Of you don;t then the consequences can be very unpleasant and leave you in a financial black hole in your later years.
Making smart investments is not something that we are ever really taught. Its definitely not taught in school and most of us have to teach ourselves. Here are 3 great tips to help get you started.
1. Diversify
We've all heard it over and over again - don;t put all your eggs into one basket. When it comes to investing this is most certainly also true. By diversifying your investments you spread your risk. While focusing can help you maximize your returns, the danger is that having too much of your money in one investment vehicle can lead to losing a substantial portion of your life savings. If you are well diversified then you can survive even a market crash. You need to diversify as much as possible and spread your investments across different vehicles, different sectors and even different countries to ensure your longevity in the market.
2. Be very careful with whom you entrust with your money.
It sure sounds easy to enlist an expert to take care of your finances, right? While there are many smart investment mangers around, nobody will care for your money the way you do. Its very important that you never just hand over your life savings to someone else and rely on them to invest it "for you". You should always be on top of it and you should always know exactly where your money is invested - even when you enlist experts to deal with it on your behalf.
3. Risk And Reward
In investing one of the most basic principles is that risk and reward goes hand in hand. The higher the risk, the higher the reward. If you are investing your life savings then obviously you got to think very carefully about the risks you take. Often times it gets frustrating to see your money grow so slowly which is why people often take too much risk. You have to have a long term view and put your security first. You can (and you should) invest a portion of your money in higher return investment but always make sure that the risk correlates with your age.
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