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Making
an Investment Plan
We are all used to
making plans. We make them every day, at work and at
home. Making a shopping list is a plan. So is organising
a holiday. Setting agendas for meetings and ranking the
importance of tasks at work are examples of planning.
How to arrange your finances is one of the most
important decisions you have to make. So make sure you
sit down and plan carefully. It is useful to develop an
investment plan that you adhere to, and only change when
there are significant changes in the basic factors.
In general when making
your investment plan, you should aim at developing a
diversified investment portfolio consisting of shares,
some property and some fixed interest investments. By
not having all your eggs in one basket, you will
maximise returns and minimise the risks that occur
during the various parts of the economic cycle.
Obviously when you start
investing, you cannot invest in all of these sectors at
once. If the timing in the economic cycle is right,
starting with some shares as your first investment often
makes sense. You can begin investing in some shares with
as little as a few thousand dollars, compared with the
large amounts of money required for the deposit of an
investment property. If you have a long-term preference
for property investments but do not have enough funds
available to enter this market, investing in shares
could prove a profitable short or mid-term alternative.
The relatively liquid nature of shares enables you to
exit the share market easily when required, in this case
when adequate funds to enter the property market have
been accrued.
Whether you are looking
at investing in shares in the short, medium or
long-term, the shares that you purchase will depend on
your individual circumstances. As no two people are
alike, share portfolios should be tailored to an
individual's needs. Your investment plan will depend on
several factors: your age, income level, the need for
liquid assets, attitude to risk taking and taxation
situation. All of these factors should be considered
when you formulate your investment plan.
Next:
Ten Strategies for Maximising Profit
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