Investment Management: How to Know You Are Making the Right Investment Choices

Investments can be risky. They can either get you a great reward, or they might cause you a loss. But investments can help your personal finances and even your retirement plan.

It comes down to having the right management when it comes to your investment management solutions. You want to make sure each one you make is calculated and that your chances of graining in money or assets have more of a chance of an increase than a decrease.

With so many possible investment choices available to you, how do you know that you are making the right decisions about your portfolio?

While investing is mostly subjective, there are ways to determine what strategies may work best to keep your money working hard for you.

What's Your Time Horizon?

If you have 30 years to grow your money, you are most likely better off with a growth portfolio geared toward stocks instead of bonds.

However, if you are closer to retirement, it may be better to preserve capital by investing in bonds or CDs. Index funds are a good way to preserve capital and achieve tangible returns for those in retirement or looking to keep building wealth throughout their lives.

Income or Long-Term Appreciation?

Dividend stocks allow investors to receive a steady income stream on a monthly or quarterly basis.

This may appeal to those who want increased liquidity or who want to use some of their returns now to pay bills or invest in other projects. Those who care more about overall returns for a long period should look for stocks that have a decade long record of consistent growth.

Realistically, an adviser from a company like State Bank of Cross Plains will work with you and may tell you to use a mixture of both.

Are You an Investor or a Trader?

An investor is someone who buys a stock because he or she wants to hold it for a long period. A trader is someone who wants to make money off of short-term price fluctuations.

Investors tend to prefer equities that will grow steadily over a long period while traders like volatility because it creates the price action they need to profit in short periods.

Do You Think About Diversification?

A good portfolio will be diversified to create a cushion against any significant pullback in one part of the market.

For instance, if the price of gold plummets, you may be buoyed by an increase in the price of education stocks.

If oil prices fall, the effect may be negated by a rise in real estate prices that can keep overall returns in the black until oil prices recover.

Do you Think About the Risks?

Every investment comes with a risk. For example, if you are looking to invest in stocks, you have to understand that stocks often tend to fluctuate.

You want to make sure that you buy low and sell high if possible, but when playing the stock market, your investment doesn’t pan out the way you want it to. But it can also get you great rewards as well.

Less risky choices would be with things like property. Remember, though, that there will not be a risk when you make an investment decision.

There is no surefire way to know whether your investment decisions are right. All you can do is make educated choices based on your preferred strategy. As long as your portfolio is diversified, you stand a good chance of making positive returns in most years.

Start Investing in Your Future Now

Manage your money with investment portfolio management tools

You are never too young to start investing for your future. While you may not really be concerned about your retirement right now you should still start putting some of your money aside. Investments are a great way of supplementing the income you have in your retirement and it can make a huge difference to the quality of life you’re able to afford when work is no longer an option. And let’s face it, do you really want to work into your seventies?

If you are smart you’ll begin investing your money as soon as possible. If you build a diverse portfolio you can reduce the risks that can be found when investing and build a great income to help you in the future. Lack of knowledge can result in many individuals not even considering investing their money but you can get over this step. There is plenty of advice that can be found online and you should always consult with a financial advisor who will be able to give you some valuable information.

You’re not too Young to Start Planning for Your Retirement

The earlier you begin investing the better; your investments will have much longer to grow in value. However, you should never simply buy stock or start investing in shares without managing your money and keeping an eye on what’s happening in the markets.

As soon as you begin work you should ask your employer about their pension plans if they have one. It is worth paying into a pension plan and if the company doesn’t offer one, you need to look into finding your own. Don’t leave it there though; you can also start saving money in ISAs or buying stocks and shares.

Diversifying your investments involves spreading out your money over different market categories. You can look at putting some cash towards stocks that are more conservative that have regular dividends as well as ones that offer more long term growth opportunities. Additionally you might like to take some greater risks that have the opportunity of receiving much greater returns.

What You’ll Need When You Start Investing

It is important that you seek some advice before you do anything. You will need to establish how much money you will want to invest initially and decide where you would like it to be invested. You can choose to play it as safe as possible, choosing only the low risk options, but if you are ready to accept more risk, you could put aside a small proportion of your funds for something that could really pay off in a big way.

When you decide how to proceed you will need to find yourself a way of managing your stocks and shares. The best option is to use an investment portfolio management tool. This allows you to monitor your diverse investments in one place. By doing so you will be able to react quickly when you need to and help reduce the risks of losing your investment simply because you haven’t been paying enough attention.

What Type of Retirement Account is Right for Me?

When starting their careers after school, new members of the “real world” are likely given some options to invest their money. This can be multiple different avenues, and many of them can help prepare for the future. If retirement is on a person's mind, they may want to look at a couple of choices to help strengthen their financial strategy.

We at World Financial Group know that individuals need to think about retirement starting at an early age. This can be a tricky process, but there are many options available to help people achieve their goals. Starting early is important, and it can prevent delays in a person's fiscal plan later on.

Planning for retirement necessary from the get-go

Everyone wants to retire comfortably, but there may be some issues on how a person will accomplish those goals. By setting a strict plan from the time a person is getting into the working world, it can improve the chances of retiring on time.

• Start saving now – There is never a point where it is too early to start putting money away for retirement, and delaying this process can hurt the chances of getting it done. 
• Know what is needed – Having set goals are only as good as the likelihood an individual can reach them. Saving a set amount and working to increase that level gradually may put the person in a better spot later on. 

Not all retirement accounts made equal

Young people need to look at a variety of retirement options, and considering these choices should be a long process. When finding the right type of plan, a person can adjust their strategy to ensure they are in the best position to save a sizable amount of money.

• Roth IRA – One of the best aspects of having a Roth IRA is that all withdrawals of the account are without any tax penalty. There are still some tax contributions, but the money taken out belongs to the person who owns the policy. This policy also allows for withdrawals before a person retires without a penalty, which can be beneficial if the account holder needs the money. 
• 401(k) – This policy allows for an individual to work with their employer in order to build their retirement savings. If account holders put a certain amount of their paychecks toward this account, they may be able to get their employers to match their contributions – thus providing a nice boost to their savings. 

These available options can help a person get the tools they need to retire successfully. However, these may be even better if a person combines them with other diversified savings plans such as a nest egg account and a college fun for any children they may have.

Financial Advice vs. Financial Coaching: Which is Best for You?

There is a distinct difference between a financial coach and a financial advisor. Sure, there titles are similar and they both purportedly help to sort out financial matters, but they are most definitely not the same. Without knowing the difference between one and the other, how can anyone be expected to make an informed decision on which service to seek? Well, they can’t. 

Financial Advisor

A financial advisor is a person who, in exchange for compensation, provides knowledgeable input into how a customer should handle their personal finances. Financial advisors must maintain a Series 65 license in order to offer their services to the public. They have a myriad of different uses, including the provision of income tax advice, investment management, insurance planning and even estate planning.

Really, the relationship between a financial advisor and his clients is that of a parent and child. The advisor is the parent, and the client is the child who follows his parent’s perceived higher knowledge. 

Financial Coach

A financial coach, at his core, is very similar to the financial advisor. They serve many of the same purposes by helping those who hire them with all kinds of money matters. However, those who seek out the aid of a financial coach often need assistance in debt relief, learning to save, budgeting and in how to spend their money well.

The coach/client relationship is really what sets the financial advisor and financial coach apart. The financial advisor is hired to manage a client’s money. The financial coach is hired to teach the client how to handle their own money effectively. As a result, the relationship between a coach and his client is one of a parent and child initially, but as in reality, the child eventually grows up to be a responsible adult.

Which is the Right Choice?

Whether a person should seek the aid of a financial advisor a financial coach is very personal. It all depends on what that person wants to eventually gain from the services rendered to them.

A person who really doesn’t want to be bothered with the mundane aspects of their money, such as budgeting, taxes and investing, from day to day might really prefer an advisor over a coach. There’s nothing wrong with that in the least. It is imperative, however, to choose a financial advisor wisely. Their goal and the client’s goal should be the same; to appropriately manage and grow the client’s money.

On the other hand, if a client really wants to learn how to handle their own money and eventually take the reins, a financial coach is the way to go. There should be a process where the coach learns all about the client's wants, needs and finances. Then a three-part program should be introduced. First, it must be decided precisely what should be done with the client’s money. Then, of course, there must be a game plan on how to make that happen. Finally, there needs to be a specified order put to the defined tasks.

A client needs to be very careful in choosing a financial coach who is out to truly help them. Avoid those who would simply put customers into a debt management system, and look for coaches who really want to teach the ways of money.

Choosing between a financial coach and advisor is highly personal. Both options should be thoroughly considered, and then potential coaches or advisors should come at the highest of recommendations before proceeding.

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