DO YOU HAVE AN INVESTMENT STRATEGY?

Investment means something different to everyone, from saving to buy a new car or a deposit on a home to buying shares or investing in real estate. We all have different opinions, needs and experiences and we base our investment strategy on what works best for us as individuals. So if you are new to investing and are in the process of putting together a financial plan for your future, here are five questions to ask yourself.

1.     What do you want to achieve?

Do you want to save a deposit for a new home, a holiday or a car? Maybe you want to set up an investment portfolio for your future retirement or create a real estate investment plan? Without a clear goal in your mind, you can’t build a strategy to achieve this goal, so your first step is to set up one or more financial goals.

2.     How much money can you save each month?

This is where you need to become realistic and decide how much money you can save or invest each month. The best way is to examine your budget and find areas where you can cut down on expenses. Of course, you still have to live and enjoy your life while you are saving, but it helps to write down all of your essential bills, including money for an emergency fund, so you can clearly see how much you can save or invest.

3.     What are your time frames?

These will depend on the goals you want to achieve, so for example if you want to save a deposit on a new home, you might give yourself two years to reach your goal. In this case, you might have to back track to step two – particularly if you realise that you can’t save enough money in two years, and readjust your expenses to ensure that you achieve your goal within your ideal time frame. On the other hand, if you want to invest in your retirement, then you will be looking at longer time frames with a number of achievable goals along the way.   

4.     What’s your risk tolerance?

Some people don’t like to take much risk with their money and others are far more risk tolerant. How much risk you are willing to take will determine the type of investments you make, for example if you want to save for a deposit on a new home, you could put your money in the bank each month or you could buy shares. Knowing that the share market is quite volatile, your risk tolerance will determine whether you prefer the security of a bank or are willing to trust your money to the market.

5.     How will you invest your money?

Saving your money in a term deposit is a low risk option and suits many people, but there are other possibilities which might work for your situation and your level of risk tolerance. At this point, it might be sensible to discuss your options with a financial planner who can help you craft a plan that is tailored to your needs. Always remember however, that diversification helps to spread your risks, so it pays to consider including shares, property, fixed interest or a superannuation fund in your saving portfolio. 

For help creating a customised saving or investment plan that suits your needs, call us on 07 3356 6929 visit our our Contact Us page.

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