5 Things to Consider Before You Make Investment Decisions

Whether you want to start investing or improve on your existing portfolio, making investment decisions can be tough. With so many different options out there, how do you know which way is best for you? There are a lot of factors to consider when making an investment decision. And since every situation is different, it is important to understand the basics before starting down the rabbit hole of options.

In this article, we will cover five things you need to consider before making any investment decisions.

1. What are your financial goals? Where do you see yourself five years from now?

Your financial goals should be specific, measurable, and realistic. They should also be time-bound. You may want to save up money for a down payment on a house or fund your retirement account.

If your short-term goal is simply getting out of debt, then it's likely not worth investing in stocks or bonds because they won't earn enough interest to cover the principal payments on your debts over time. In fact:

• The average investor loses money over time by investing in dividend-paying stocks instead of low-cost index funds.
• Stocks with high dividend yields outperform those with low dividends—but only if they have strong fundamentals.

2. How much time will you have to dedicate to your investment?

• How much time will you have to dedicate to your investment?
• How much time do you think it will take your family and friends, who are not experts at investing, to understand the basics of a mutual fund or ETF portfolio?

If the answer is "not very long," then maybe this isn't the right option for you. But if your answer is "a few hours at most," then we recommend looking into more sophisticated investments with higher payoffs that require less work from an expert.

3. Are you repaying a loan?

You should also consider if you are currently repaying a loan. If the answer is yes, then it is best to wait until your balance is paid off before investing in anything else.

If the answer is no, then there is no need to worry as you have enough income that you can save & invest. 

4. Do you have an emergency fund?

The first thing you should think about is whether you have an emergency fund. An emergency fund is a savings account that can be used in times of financial hardship, such as unemployment or illness. It is typically set up with three to six months' worth of living expenses and can help prevent borrowing from other sources like credit cards and payday loans.

5. Do you have a plan for your retirement?

The first step to investing is to determine how much you need to save, and how much of that should go into stocks. If you are at a young age, your best option may be to put aside as much as possible while still leaving yourself some room for some fun. However, once you have reached your mid-20s or beyond (or if you plan on having kids), it's time for serious savings!

The second step is determining what kind of investment will best fit your goals and risk tolerance. For example, if there are certain areas where stocks don't make sense due to high volatility or market fluctuations, then these won't be suitable investments for them either—so make sure that any funds are clearly labelled.

Time, goals, and plans are important when considering investing.

It is important to consider the time, goals, and plans you have for your investments.

• Time: How long do you want to hold an investment? Do you want it in retirement accounts or other financial instruments like bonds, stocks, or mutual funds that provide liquidity?
• Goals: What are your short-term goals with an investment strategy? Are they steady increases over time (e.g., buying low and selling high) or do they fluctuate based on market conditions (e.g., buying high when prices go up)?
• Plans: What specific actions will help achieve your long-term objectives? For example: what steps need to be taken before selling this asset at its current price point? How much money should I invest today so that my portfolio is optimized by next month's tax deadline? How often should I rebalance my portfolio between now and then?

Conclusion

Investing can be a great way to grow your wealth and secure your financial future, but it is not easy. It takes time, planning, and research before you can make informed decisions about where to put your money. If you have questions about how these five factors affect your investing decisions, we encourage you to contact us today!