The two most important factors to consider when investing
that you must never forget.
(a 7 to 10-minute read, depending on your speed)
In this final (of three) Insights, you’ll learn the two most important factors to consider – when trying to decide what level of investment risk to take – on each of your financial life goals.
These Insights are written to help all (new, recent and experienced) investors because we must all ensure that the risks we take on our investments are right for our personal situation.
Do you need to read the earlier Insights?
Yes, absolutely, because in the first two insights, we:
- Showed why it’s impossible for anyone (however smart they claim to be) to advise you on investments from a blog, book or video! Your adviser needs to be qualified AND know all about your personal circumstances and ambitions.
- Outlined the ten foundations of personal finance to sort out – before you consider investing.
- Explained why investments tend to produce higher returns than cash savings – over the long term.
- Illustrated the effect of a small extra return – over the long term.
- Warned of the extreme risks of aiming for much higher returns than mainstream diversified funds can deliver.
- Pointed to the overwhelming choice of (140,000) investment funds and why analysing those is the wrong way to approach this.
- Provided you with a simple model to understand the risk and reward spectrum of investment funds.
- Explained the first two important factors to consider when investing – about your ‘Need’ to take risk and your ‘Attitude’ to it.
So, please start with the first Insight in this series – which covers the first six points above.
Now, let’s complete our outline of the four (NACK) factors to consider when investing, starting with the vital question of your capacity for risk.
C is for Capacity for Investment Risk
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