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 The 3 Pillars of Investing

If you have been attending financial seminars or reading books lately, you are probably challenged. You want your life to take a different turn and align in the direction of financial freedom and success. So you are thinking of investing. It is a simple word with many dynamics. If you are new, you will be confused and lost for a while, but there is hope for you.

The market is always going up and down and the best sophisticated investors thrive in both times. Unlike owning a car where you can easily get a car accident attorney when an accident strikes, investing has no cushions. Everyone goes in hoping to grow their money faster than if they just kept it in a savings account. If breakeven analysis, portfolio management and ROI still confuses you, consider these factors:

3 Pillars of Investing

1.Objective

You cannot just start out on this journey without having a plan. Whether you want to set up a project to finance your children’s education, to secure your life after retirement, to have financial freedom or just because you are excited, every reason will guide you in the way you invest.

The objective will allow you to work within your financial limits without being frustrated. If you will want to liquidate after some time to use the money, this will determine which investment vehicle you will settle for. The objective will help you determine how much money you want to make from your investment and help you work against a set standard.

You can only do this if you are honest with yourself concerning your current financial position, the debts you need to pay and whether or not you can adjust your expenditure. The why is the back bone of every investment

2.The time

All time is not investment time. Different investment vehicles be it stocks or real estates, have their peak and low seasons. You need to study the market to know when to invest. Nobody wants to lose their money because the market never favored them.

This means that research is your best friend. Read widely and consult your financial advisors to know the perfect time. You could also just watch the market and watch news. Money is made at the point of purchase not sale, so make sure you buy something worthy.

You don’t want to invest all your money and loose it all to panic when your job ends. Before you invest, make sure that you have set aside three months’ emergency kit that will sustain you if anything changes. You need that peace of mind to focus and grow your investment.

3.Risk tolerance

Don’t just follow the wave without knowing how much money you are willing to lose. High risks come with high returns and vice versa. But how much you want to gain is simply how much you are willing to lose. You need to evaluate how much risk you can stand and make decisions based on that.

If you love doing everything for yourself, you might think it is riskier to have somebody else manage your funds. It is not necessarily true because experts can help you avoid risks that you could never see on your own. Part of taking risks is knowing if you want passive income or you want to be actively involved in the process.

Conclusion

Investing is not for the fainthearted. You will need to soul search, consult widely and do your homework to avoid falling for projects that overpromise only to disappear with your savings. These factors might look simple but they are the pillars of investments and with them, you can start on a journey to your riches. They are simple but not easy.

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