{"id":1729,"date":"2016-10-31T09:08:31","date_gmt":"2016-10-31T09:08:31","guid":{"rendered":"http:\/\/www.newsfin.co.uk\/news\/?p=1729"},"modified":"2016-10-31T09:08:31","modified_gmt":"2016-10-31T09:08:31","slug":"choosing-investments-2","status":"publish","type":"post","link":"https:\/\/jalapenoltd.co.uk\/news\/choosing-investments-2\/","title":{"rendered":"Choosing investments"},"content":{"rendered":"

What you need to know to become a more confident investor<\/strong>
\nBefore you choose or make any investment decisions, you need to know that investing involves the possibility of loss. These key considerations help you become more confident about your investment decisions.<\/p>\n

Review your needs and goals<\/strong>
\nIt\u2019s well worth taking the time to think about what you really want from your investments. Knowing yourself, your needs and goals, and your appetite for risk is a good start.<\/p>\n

Consider how long you can invest<\/strong>
\nThink about how soon you need to get your money back. Time frames vary for different goals and will affect the type of risks you can take on.<\/p>\n

For example, if you\u2019re saving for a house deposit and hoping to buy in a couple of years, investments such as shares or funds will not be suitable because their value goes up or down; you may be better off sticking to cash savings accounts like Cash Individual Savings Accounts (ISAs).<\/p>\n

If you\u2019re saving for your pension in 25 years\u2019 time, you can ignore short-term falls in the value of your investments and focus on the long term. Over the long term, investments other than cash savings accounts tend to give you a better chance of beating inflation and reaching your pension goal.<\/p>\n

Make an investment plan<\/strong>
\nOnce you\u2019re clear on your needs and goals \u2013 and have assessed how much risk you can take \u2013 you need to obtain professional advice to identify the types of product that could be suitable for you.<\/p>\n

A good rule of thumb is to start with low-risk investments such as Cash ISAs. Then, add medium-risk investments like unit trusts if you\u2019re happy to accept higher volatility. Only consider higher-risk investments once you\u2019ve built up low and medium-risk investments. Even then, only do so if you are willing to accept the risk of losing the money you put into them.<\/p>\n

Diversifying to accept more risk<\/strong>
\nIt\u2019s an accepted rule of investing that to improve your chance of a better return, you have to accept more risk. But you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don\u2019t necessarily move in the same direction. This helps you to smooth out the returns while still achieving growth and reduce the overall risk in your portfolio.<\/p>\n

Decide how hands-on to be<\/strong>
\nIf you need help understanding a financial product, it\u2019s essential that you obtain professional financial advice before you proceed.<\/p>\n

Investing can take up as much or as little of your time as you\u2019d like. So if you want to be hands-on and enjoy making investment decisions, you might want to consider buying individual shares \u2013 but make sure you understand the risks.<\/p>\n

If you don\u2019t have the time or inclination to be hands-on \u2013 or if you only have a small amount of money to invest \u2013 then a popular choice is investment funds, such as unit trusts and Open Ended Investment Companies (OEICs). With these, your money is pooled with that of lots of other investors and used to buy a wide spread of investments.<\/p>\n

If you\u2019re unsure about the types of investment you need or which investment funds to choose, seek professional financial advice.<\/p>\n

Higher-risk products have their place <\/strong>
\nThere\u2019s no reason not to invest in higher-risk products if they suit your financial goals, attitude to risk and you already have a safety margin in low-risk investments such as a Cash ISA. But only consider higher-risk products once you\u2019ve built up sufficient money in low and medium-risk investments. Before investing, it\u2019s essential that you fully understand their specific risks and are happy to take them on.<\/p>\n

Review investments periodically <\/strong>
\nInvestors who watch their investments day to day could have a tendency to buy and sell too often and subsequently achieve poorer returns than investors who leave their money to grow for the long term.<\/p>\n

Annual reviews will ensure that you keep track of how your investments are performing and adjust your savings as necessary to reach your goal. You will get regular statements to help you do this.<\/p>\n

However, don\u2019t be tempted to act every time prices move in an unexpected direction. Markets rise and fall all the time and, if you are a long-term investor, you can just ride out these fluctuations<\/p>\n

Different \u2018styles\u2019 of investing<\/strong>
\nSome assets are said to be \u2018negatively correlated\u2019, for instance, bonds and property often behave in a contrarian way to equities by offering lower but less volatile returns. This provides a \u2018safety net\u2019 by diversifying many of the risks associated with reliance upon one particular asset. It is also important to diversify across different \u2018styles\u2019 of investing, such as growth or value investing, as well as across different sizes of companies, different sectors and different geographic regions.<\/p>\n

Growth stocks are held as investors believe their value is likely to grow significantly over the long term, whereas value shares are held because they are regarded as being cheaper than the intrinsic worth of the companies in which they represent a stake. By mixing styles that can out- or under-perform under different economic conditions, the overall risk rating of the investment portfolio is reduced. Picking the right combination of these depends on your risk profile, so it\u2019s essential to seek professional advice to ensure that your investment portfolio is commensurate with your attitude to investment risk.<\/p>\n

Currency risk<\/strong>
\nYou should also be aware of currency risk. Currencies (for example, sterling, euros, dollars and yen) move in relation to one another. If you are putting your money into investments in another country, then their value will move up and down in line with currency changes as well as the normal share price movements.<\/p>\n","protected":false},"excerpt":{"rendered":"

What you need to know to become a more confident investor Before you choose or make any investment decisions, you need to know that investing involves the possibility of loss. These key considerations help you become more confident about your investment decisions.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"_links":{"self":[{"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/posts\/1729"}],"collection":[{"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/comments?post=1729"}],"version-history":[{"count":0,"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/posts\/1729\/revisions"}],"wp:attachment":[{"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/media?parent=1729"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/categories?post=1729"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jalapenoltd.co.uk\/news\/wp-json\/wp\/v2\/tags?post=1729"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}