Do you have an investment plan? If not, are you planning to create one in the near future? The answer to one of those two questions should be yes, otherwise you should accept your financial future will be largely left exposed to what may or may not occur in your life.
Creating an investment plan need not be overly-complex. It should begin by assessing what goals you have in life. You are likely to have several of these, some of which might be relatively short-term goals while others might be long-term ones. The best part of doing this is that you’ll know when you need the money you invest.
For instance if you have 30 years to go until you retire, it will be a long-term goal to save a certain amount before you get there. However if you only have five years to go until retirement, this will be a short-term goal to consider. This doesn’t just apply to retirement either – it applies to every type of goal you may have in mind. As such it is not enough to have a goal to focus on; you should also know when that goal needs to be achieved by.
Once you have a rough plan in mind in this way, you should consider how much risk you want to take on. Investments that involve a greater degree of risk may operate more successfully over a longer period of time. Stocks are a great example of this. You wouldn’t generally invest in stocks for a year or two, since there is a much greater chance you could lose money if this was the case. However if you are able to invest in stocks over a period of 10 or even 20 years, you would stand an excellent chance of making a good profit on your investment over that period of time. The stock market tends to have real ups and downs, but over the longer term they are smoothed out far more than would otherwise be the case.
One important factor to bear in mind when you are considering an investment plan is the amount of risk you would personally be happy to accept. Some people are naturally far more risk-averse than others. This is no bad thing – the most important thing is to make sure you choose those investments that suit you best in this area. While it is true a higher degree of risk can bring greater rewards, there is no guarantee of this. Therefore if you are unhappy with a particular amount of risk it is probably best to back away from those investments that surpass your level of comfort in this area.
As you can see, creating an investment plan doesn’t need to be a major exercise. It could merely be a case of setting a few goals and asking a few questions of yourself before proceeding. Providing you check back with it every now and then there is a good chance you will achieve greater success with a plan than you would without.