8 Steps to Long Term Investing
1. Get your finances in order and determine how much you can comfortably afford to invest on a monthly basis in order to benefit from compound interest and dollar cost averaging. Look at where you can save money on your daily expenses in order to increase the amount you invest on a monthly basis.
2. Determine which countries, industry sectors or commodities you feel will benefit from long term growth and wealth creation.
3. First look for index funds or exchange traded funds (ETFs) which track the countries, industry sector or commodities of your choice. If you cannot find index funds or ETFs to track the markets of your choice, you can then look at mutual funds.
4. Check the total expenses ratio (TER), the 5-10 year performance and whether you can invest these funds in tax efficient vehicles such as Individual Savings Allowance (ISAs), Self Invested Personal Pension (SIPPs) or Individual Retirement Account (IRA).
5. Open an Investment Account with an investment broker of your choice making sure you can invest in tax efficient vehicles via your investment account.
6. Discuss your investment objectives and obtain financial advice from your financial adviser.
7. Decide how you want to allocate your monthly investment. Asset allocation involves spreading your risks across assets that are not correlated such as equities, commodities and bonds.
8. Review your portfolio every 3-6months to monitor and adjust your investments according to the volatility of your portfolio and your age. The closer you are to retirement age; you should have the majority of your investments in safe assets such as bonds and treasury bills.
These steps are important in making wise and objective decisions when it comes to Long Term Investing and not emotional decisions. Also, remember that Long Term Investing means having a Long Term Plan and look to invest for at least 10 - 20years.
1. Get your finances in order and determine how much you can comfortably afford to invest on a monthly basis in order to benefit from compound interest and dollar cost averaging. Look at where you can save money on your daily expenses in order to increase the amount you invest on a monthly basis.
2. Determine which countries, industry sectors or commodities you feel will benefit from long term growth and wealth creation.
3. First look for index funds or exchange traded funds (ETFs) which track the countries, industry sector or commodities of your choice. If you cannot find index funds or ETFs to track the markets of your choice, you can then look at mutual funds.
4. Check the total expenses ratio (TER), the 5-10 year performance and whether you can invest these funds in tax efficient vehicles such as Individual Savings Allowance (ISAs), Self Invested Personal Pension (SIPPs) or Individual Retirement Account (IRA).
5. Open an Investment Account with an investment broker of your choice making sure you can invest in tax efficient vehicles via your investment account.
6. Discuss your investment objectives and obtain financial advice from your financial adviser.
7. Decide how you want to allocate your monthly investment. Asset allocation involves spreading your risks across assets that are not correlated such as equities, commodities and bonds.
8. Review your portfolio every 3-6months to monitor and adjust your investments according to the volatility of your portfolio and your age. The closer you are to retirement age; you should have the majority of your investments in safe assets such as bonds and treasury bills.
These steps are important in making wise and objective decisions when it comes to Long Term Investing and not emotional decisions. Also, remember that Long Term Investing means having a Long Term Plan and look to invest for at least 10 - 20years.
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