How to make the right investment choices

Wed, May 20, 2015

Financial Advice, Investment

There is no simple answer to this question, in the form of a one-size-fits-all solution. In fact, your answer will be unique to your own individual goals, needs and expectations. Here are a few guidelines to get you thinking about an effective and personalized investment spread.

Evaluate your risk tolerance

Younger investors may well find increased levels of risk more acceptable, and be happier with a high-risk portfolio, simply because they imagine that they have more time for saving. Less volatile investments are usually more attractive to older investors as they deliver steadier returns, and can be counted on for predictable withdrawals. Asset diversification and allocation are always of paramount importance, but essentially the advice is to choose an asset mix that gives you personal peace of mind.

Choose the right risk-reduction strategy

Investment choices are often designed with longer time frames in mind, and a number of strategies have been designed to reduce personal risk by spreading it across the portfolio rather than concentrating it all in one fund, for example. Industry experts such as Wes Edens and Fortress Investments can help you make informed decisions in this context. Wesley Edens himself has considerable experience in advising international clients on the best investment choices, based on their personal preferences and detailed financial requirements.

Identifying the time horizon

The time available between investing in any particular asset and the eventual return on it can vary enormously. You have to know when it is that you will need the money, in essence, and bear in mind that the length of time that it is left alone to grow will significantly impact the choice of investments you make.

Account monitoring

Once you have settled on your list of investment choices, the account should be reviewed regularly to ensure that it continues to meet the objectives you set for it at the outset. The general mix of investments in any portfolio can change the investment performance, and also if your personal circumstances change you will need to look at your choices again, and make alterations where necessary.

Summary

Understand that investment involves the real possibility of loss, which is why it is so important to identify your personal risk tolerance at the outset, and how much time you can reasonably allow for your investments to grow and make a good return. Time horizons and risk tolerance will in turn determine the makeup of your portfolio.

 

 

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