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Throughout our lifetimes, we are all witness to a number of life events that could cause our finances to take a significant hit. Some are positive life events, such as the birth of a new child (or even grandchild), while others may be moments of great sadness, such as a bereavement or even a divorce.
Sadly, life isn’t linear and there are lots of lumps and bumps on the way. You may think an inheritance or divorce proceeding may go your way but that’s not always the case. With the right estate attorney or an experienced pendente lite alimony attorney in Maryland (or perhaps one closer to you), things may go your way and you could get a temporary spousal support order or some chunk of estate, but how are you going to support yourself financially long term? Lifetime support isn’t guaranteed, and you have to find other sources of income eventually. That is why, whenever you come into some money, you should invest it, and here are five tips on how you can do that.
- Only Invest in Things You Understand (Or Seek Help)
You may be able to understand concrete investments like property, oil, and even grain, but can you understand abstract concepts like tech or mortgage-backed securities?
If you can’t, stay away. Investing is all about making informed choices, and you can’t make an informed choice or a calculated risk if you don’t understand the product to begin with.
This goes for tax implications, too. If you’re unsure on how you may be implicated by taxation or are unsure on what products are right for you, then don’t take the gamble and use a specialist in life event financial planning like Tilney.
- Diversify Your Portfolio
Diversity is the secret to risk management. There’s no “one size fits all” successful strategy when it comes to trading, but there are some rules that nearly all investors follow. For example:
– Only have a maximum of 5 per cent of your money in a singular stock or bond
– Only invest up to 20 per cent in any one sector
– Mitigate risks by investing in long-term assets like real estate, bonds, and precious metals.
If you forgo either of these rules then you could destabilise your portfolio if the economic situation turns against you.
- Don’t Trust Hype, Trust Research
Marketing plays a large part in stock tips. Do not be suckered in by promotional hype. Instead, trust your research and your data interpretation. If it seems too good to be true, then it often is.
Again, if you have a money manager, consult them about this. Never dive into a stock based on a press release.
- Remember your Long Term Goals
Never lose sight of the fact that you have a “buy and hold position”, which means exactly as it says. You’re supposed to hold it for the long term. Don’t buy and sell with every single up and down in the market, as this very rarely leads to any success. Instead, invest in assets that are less prone to seeing much rise and fall in their value since those can have steadier profit rates. Precious metal could be one such option that you can explore on the Gold Silver website (check goldsilver.com reviews for more information) or similar others to reduce investment losses. Additionally, you need a coherent and long-term investment strategy to create a diverse portfolio that is risk-free and can generate steady income for years.
- Consider investing in Dividends
Consider buying investments that generate dividends, interest or other income. With interest rates from savings accounts at all-time lows, investments can provide a valuable regular income.
Follow these five tips and you’ll be well prepared to use your money wisely.
