Investments are potent means for growing or accumulating wealth. Nonetheless, you must keep certain things in mind before proceeding to making an investment.
In every investment, there are always risks. That’s why there is what is called ‘calculated risk’, this is what you want to take on. You have to be cognizant with the risk/reward ratio of the investment and analyze if it is something you can stomach.
This ratio compares the amount the investor will likely lose if the price he bought in on said investment moves against him vs the profit he stands to gain when the investment is closed out.
Individual Risk Appetite
You should be able to gauge your risk meter. What is the threshold are you willing to risk that will not make you wake up at night, worked up about it?
Different people have different risk appetites so you should be prepared to invest what cannot weigh in case things go south.
This is the what is available at your disposal to spare for the intended investment. Your investment capital greatly influence your choice of investment. Not having a large amount of capital does not mean you are limited as there is always a wide range of investments opportunities to choose from. Many people also make use of leverage to enter into investments they are confident of, to have an edge.
Time is of the most importance and should be considered very closely before venturing into any investment. Usually, almost all investments must go pass the test of time to see whether they give back dividends to their investors or otherwise.
Time difference between different investment vehicle is relative. Some move faster than others in terms of growth so you must consider if you are prepared to anticipate whatever time your investment may need to mature.
Have A Contingency and Back Up Plan
This can be done by having and insurance cover for your business as well spare cash or assets
Get Professional Advice
Last but certainly not least, you must seek for professional opinion that’s guided based on experience so that you are fully equipped to weather the risks that may arise in your investments.