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Tips in Choosing Excellent Investment

Here are great tip that will help you choose the best investment tailor-made for your needs:

> Review your needs and goals – It is well worth taking the time to think about what you want from your investments. Your needs and goals and your appetite for risk is a good start, so start by filling in a money fact find.

> Consider how long you can invest – Consider time frame as to when your funds are needed.

                - If you’re saving for a solid investment in the next couple of years, consider investing in shares or funds is not feasible. Stick to cash savings accounts like Cash ISAs.
                - If saving for pension/retirement funds, ignore short-term investment and focus on the long-term, it will       tend to provide a better chance of beating inflation and reaching your pension goal.

> Make an investment plan - Once you’re clear on your needs and goals, draw up an investment plan – this will help you identify the types of products that suits you. Rule of thumb: start with low-risk investments, then medium-risk investments to the high-risk one.

> Diversify! - Basic rule of investing that to improve your chance of a better return, accept more risk. However, you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don’t necessarily move in the same direction – this is called diversifying. It can help you smooth out the returns while still achieving growth, and reduce the overall risk in your portfolio.

> Decide how hands-on to be - If you want to be hands-on and enjoy making investment decisions, consider buying individual shares – make sure you understand the risks. If no time or inclination to be hands-on – or you only have a small amount of money to invest – popular choice is investment funds, i.e. unit trusts and Open Ended Investment Companies (OEICs). If unsure about the types of investment needed, or which investment funds to choose, get financial advice.

> Check the charges - Buying investments, like individual shares, direct; use a stockbroking service and pay dealing charges. If deciding on investment funds, there are charges – like paying the fund manager. If you get financial advice - pay the adviser. Whether you’re looking at stockbrokers, investment funds or advisers, the charges vary from one firm to another.

> Investment to avoid - Avoid high-risk products unless you fully understand their specific risks and are happy to take them on. Only consider higher risk products once you’ve built up money in low and medium-risk investments.

> Review periodically – but don’t ‘stock-watch’ - Regular reviews, like annually, will ensure that you keep track of how your investments are faring and adjust your savings as necessary to reach your goal. Don’t be tempted to act every time prices move in an unexpected direction. Markets rise and fall randomly, if you are a long-term investor, just ride out these fluctuations.

Happy Reading!

Michael Welter

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