When it comes to investing and / or personal financial planning, there is no one-size-fits-all! Depending on age, needs, goals, priorities, risk tolerance, purposes, etc., the most appropriate strategy can be determined on a case-by-case basis, on a case-by-case basis! Your total assets, liquid assets, income (from a variety of sources), job security, reserves and staff, comfort zone / level, are important factors in determining the best way forward for you in terms of building a staff. , investment portfolio. With that in mind, this article will briefly attempt to consider, examine, review, and discuss, which combination might make the most sense for your specific combination, and set of conditions and factors.
1. Risk tolerance: One of the first things to consider is your personal risk tolerance. That means, in simple terms, how could you balance, invest, and be able to sleep at night! Many people confuse the terms, especially when it comes to mix, difference, growth, and income. How often have you heard, someone, declare, growth: the investments they had, did not offer enough income and / or the investments focused on the income did not provide growth / price increase, etc.? One must consider how much risk they are ready, willing and / or able to tolerate and accept!
2. Objective goals: Clearly identify your individual goals and objectives when considering your portfolio mix. Some goals include: saving for a child’s education; creating a fountain, to buy a future home; develop a retirement fund; etc. It usually makes sense to carefully choose the right mix of investments for each objective. Achieving goals is generally easier / simpler, when done, over a longer period of time, so one could take advantage of the dollar cost averaging concept. This approach often minimizes overall market risk, because when purchases are made, at a specific point, every month, the market fluctuation becomes much smaller, relevant and significant.
3. Needs: We are individuals and we have our own needs! Avoid, try Keep up with the joneses, because, what might make sense, for them, may not, for you, and what you need! Do you need growth, present income, future income, or some combination, etc.?
Four. Small versus large – capitalization, equity: We often hear the terms, small cap, versus large cap. This refers to the amount of capitalization of the sole proprietorship, investment, or mutual fund. The value, monetary stability, and soundness of any business can be a factor in safety, etc.
5. Bonds and preferred shares: Corporate bonds are debts that companies use to raise money or capital. Some are unsecured, but generally we consider covered bonds (obligations), which are backed by the finances of that company. So while many consider bonds to be safe, that depends on the quality of the specific company. Preferred shares are generally preferred forms of capital and pay a regular dividend. Most of the people who invest in these two types of investments are looking for constant income. Right now, due to a record, interest rates, the prices of existing bonds, are high, because they were issued, when the rates were higher, and the price of the bond adjusts, because it determines the total. produce.
The more you know and understand, the better you will determine your portfolio mix, which might better meet your individual needs, goals, and priorities. Become a smarter investor!
