Those who are considering growing their money through investments are often confused by the myriad investment options in the market. But there is no doubt that good investment strategies and financial planning are key to financial security and wealth.
So what constitutes investing for beginners? It’s about self-education, seeking the right investment advice, investing in quality products and structuring investments tax effectively. Here’s a quick look on how to invest wisely.
Read Investment and Financial News
Don’t invest blindly or follow hot tips from friends. That’s a sure way to lose money quickly. Instead, make time to read up on investment, business and financial news. The business and finance section of the daily newspaper is a good place to start. Pay attention to investment news on the TV, radio and Internet too. Learn to read company reports and financial analyses.
Well-established financial magazines also often feature in depth articles on the share market, property investments and taxation matters. Scores of books are written each year to help people understand the financial market. Use the local library if buying financial magazines and books is hard on the wallet. It’s crucial to do some homework before starting to invest in anything.
Get Advice from a Registered Financial Planner
Good financial planning can help investors maximize their returns in the long run. While it’s true that choosing the right financial planner can be a challenge itself, it’s a worthwhile undertaking. Start by asking for referrals from friends and relatives with similar financial situations and goals.
In Australia, licensed and registered financial planners can be easily searched through the Financial Planning Association website. After several financial advisers have been shortlisted, make initial appointments with them. Ask about their backgrounds, areas of specialty, the types of clients they usually service, references from their existing clients and how they charge.
Choose only Quality Investments
During boom times, many investment products emerge, including shabby investments that seem to be doing exceptionally well. As a result, inexperienced or greedy investors feel compelled to buy even dodgy investment products since everything is going up in value. Avoid making this mistake because such investments are always the hardest hit during economic downturns. The sensible thing to do is to invest only in quality assets during both economic booms as well as downturns. Quality investments will yield better returns in the long run.
Plan Investments in Tax Effective Ways
Investment income is subject to government taxes. So be careful and plan investments to reduce taxes. Again, financial planners can be a great help here. But in general, Australian investors can reduce tax through gearing losses when borrowing to invest, salary sacrifice and investing within superannuation.
Also, avoid tax effective investments promising big returns with minimal tax. These dubious schemes, or rather scams, tend to mushroom at the end of the financial year. Visit the Australian Securities and Investments Commission website for tips on recognizing illegal investment schemes.
Investing for beginners should start with ample and updated knowledge on investment products and financial news. Investors should also get professional financial planning services, buy only quality investments and structure tax effective investments.
Found this article useful? Read also The Basics of Investments, How to Invest Money Smartly and How to Start Investing on a Low Income.
References:
Power, Trish and Drury, Barbara. Investing for Australians All-in-On for Dummies. Queensland: Wiley Publishing, 2008.
Koch, David. Kochie’s 101 Ways to Survive 2009. Melbourne: Wilkinson Publishing, 2009.
Investing for Beginners Start with Knowledge
|
Invest Only in Quality Investments
|
