1. Review your long-term and short term goals and needs. Short-term may include buying a house while long-term may be a education fund or your retirement plan.
2. Consider how soon you will need the money back. If it is for retirement you may not need it as soon as if you are investing for your child’s education. This can help you choose the best type of investments for you.
3. Understand your appetite for risk. If you can not withstand losses in the short term, you are better off investing in risk free investments like Treasury Bills.
4. Take your age into consideration. If you are relatively young, you can afford to take more risk. Not only do you have fewer responsibilities, you also have more time to recover from any losses that you might incur should the market fail you. On the other hand, if you are older and fast approaching retirement, it makes much more sense to put money into safer investments to reduce the risk of losing any or all of it by the time you retire.
5. Understand the different investment options that are available. These include shares, bonds, mutual funds, precious metals, property and even cryptocurrency. To make a wise and informed decision, it is useful to have accurate, comprehensive and timely information about all of these investment options.
And most importantly, identify a trusted financial advisor to help you understand what options are available.