As a financial planner, I often get asked the question ‘what should I invest in?’. With a wide range of investment opportunities out there, such as shares, property, bonds, infrastructure, foreign exchange and commodities, there is a large opportunity to generate returns. However with that also comes a large amount of risk, particularly if you are not adequately informed when making your investment decisions.
Whilst, I could give you a general response about what to invest in, doing so is of limited value if I do not understand your financial situation and the reason for your investment. What are you investing for? What are you trying to achieve and over what time frame? How much capital are you willing to invest with? Do you have any additional liabilities or debts that need to be balanced along with your potential investment? These are all important pieces of information needed to make the most suitable and tailored investment path for your financial goals.
So, how do you create a plan? When I meet with my clients, my goal is to understand their financial situation and then establish a plan to achieve their financial goals. To do so, we ask the following types of questions.
How long are you investing for?
The desired length of investment will have a strong impact of the type of investment decision to take both in terms of the initial capital required and the timeframe to see your financial returns.
Why are you investing?
Are you looking for an investment that will give you short term income, or growth, or a mixture of both?
What will you do with the profits?
Are you looking to pocket the profits for personal spending or pay off any outstanding debts or do you want to reinvest the profit into new avenues to help expand your income growth?
When will you need the money?
Do you have a short or long term financial goal that you’re trying to achieve? Do you have reserve funds in case of emergency?
Coming up with a plan first is a powerful guard rail for investors. It takes time, but as the saying goes, if you fail to plan you plan to fail.
To learn more about how the experienced team at Access Financial Planning can help you achieve your financial goals, get in touch today for an initial consultation.