Evaluate your Current Financial Situation
Before you think of investing, get a clear picture of your present financial status. List out the entire reservoir you have such as salary, bank savings or investments like shares or unit trusts. Also make a list of financial obligations such as debts you owe, household expenses, credit card balances, taxes, insurance premiums and so on. Assessing your current financial health will help you get a better idea of where you are and where you want to be financially.
Assess your Risk Tolerance
According to experts, risk and reward always go hand in hand. That means, if there is no pain then there is no gain. Every investment is subjected to a certain degree of risk. Generally, higher the risk, higher is the potential return. If you have a long term financial goal, you are likely to get more potential return by carefully investing in asset classes of high risk like stocks and equity funds rather than restricting your investments to less risky assets. Risk tolerance can be assessed with the help of questionnaire tools available online. Knowing your risk appetite helps you choose the proper mix of asset classes.
Determine your Financial Goals