Top Five Investment Tips in Preparing for Life Events

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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 receive an inheritance after losing a loved one or receive money from selling a business. Here are our top five tips on how you can invest this money.

  1. 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.

  1. 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

If you forgo either of these rules then you could destabilise your portfolio if the economic situation turns against you.

  1. 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.

  1. 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 any sell with every single going up and down of the market, as this very rarely leads to any success. You need a coherent and long term strategy.

  1. 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.