Finding an investment that’s right for you
Chances are, we all make mistakes in life. When it comes to investments, we have so many options to choose from. How we come up with an analogy will influence our investment choices. Here are some tips on choosing the right option for you.
The first important question we need to answer is what is the relationship between risk and return? What is our interpretation of risk and return? In investing world, understanding this relationship help us make important decisions.
Risk and Return
Risk is the possibility of you lose money in your investment, and return is the amount you may earn.
Risk and return are fundamentally linked, the greater an investment’s potential to achieve higher return, the greater the risk is associated with it. Once we understand this relationship, it leads to our next question.
What type of investors are you?
How you choose to invest is largely depending on the type of investor you are. There are many key considerations in choosing an investment, those include:
- How long are you investing for?
- How hands-on you want to be when managing your investment?
- How much investment risk are you comfortable with?
- What is your investment objective?
