Most smart investors put enough money in savings products to cover an emergency and invest the balance so as to maximise returns. To determine which investments are appropriate for you, you need to know how much money you can invest in depending on the current situation of your life.
You may want to consider the following factors as a guide to help you decide on the choice of investment.
Related Information
Managing your money
Lifecycle strategies
Planning your investment
Protecting investments
Goals and Needs
Your investment depends on your goals and needs for future investments. Do you wish to buy a house ? Do you want to plan for your children’s education or your retirement?
Age
Your age is important when deciding how much risk to assume. If you are young, you can invest in relatively riskier investments.
Income
Your income level influences the types of investments you can hold. If you earn more, you will have more money to invest.
Occupation
If your job provides a retirement plan for you, you may not need a separate retirement plan.
Wealth
The types of assets you hold would affect the level of risk that you are prepared to accept. Savings and fixed deposits are of the lowest risk while investing in bonds and equities are of higher risk.
Time Horizon
You need to choose the maturity of the assets you intend to invest in. When do you want to sell your assets?
Liquidity
Your need for funds in the future. If you need funds within the next 2-3 months, you may want to keep your funds in bank deposits which are most liquid as compared to bonds and unit trusts.
Tolerance for Risk
Assess you tolerance for risk to see how comfortable you are with market volatility.
