09 July 2017

Questions before you invest

As an investor, you should ask yourself these 3 questions before you start investing.
  1. Investment Horizon
  2. Risk Appetite
  3. When you want to be Financial Freedom?
Investment Horizon is the very first question you should ask yourself. The length of investment ties with your age. If an investor who is 62, his investment horizon will probably be 20 years. The type of investment he should choose is passive income investment to protect his capital and get dividend income for his daily expenses or allowances. If an investor who is 25, his investment horizon is 50 years or more. The type of investment he should begin with is investment with growth then follow by passive income investment once he had built up his pot of gold. Of course, if he is not a high risk taker and time is on his side, he could opt for passive income investment and let compounding do the work.

The second question you should ask is your risk appetite. What I mean by risk appetite? If your investment is too huge until you cannot sleep at night and keep on thinking of your investment. You are probably not knowing why and what you are investing. Investment should give you a peace of mind after you had put in your money. If you are a low risk taker, you probably want to choose index investing as a form of investment. Remember, every investment is a risk. As long as it is a calculated risk, we should be fine with our investment.

The last question is when you want to be Financial Freedom determine the risk you going to take for your investment. If you intend to be Financial Freedom by 35, you are likely to take on a more risk approach toward investment. If you intend to be Financial Freedom by 55, you can take on an investment that have a combination of both growth and dividend investing given the more time you want to be Financial Freedom.

Let's assume you already know your Fundamental Analysis and Technical Analysis. Do you agree with me on these 3 questions to ask yourself before investing or there are more? Share with me if there are more as I also want to learn.

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