Planning your investment: Step 2 - Know the key issues to consider when investing
As investments are long-term commitments, you must consider your ability to invest before you commit yourself. Among the key issues to consider are:
- How much money do you have for a medium to long-term commitment?
- Do you fully understand the product that you are investing in?
- Does the intended investment fit into your overall portfolio?
- Have you compared returns on other similar investments?
- Do you understand the risks involved and do you know your tolerance level for loss? (i.e. how much changes in the price/value of your investments can you tolerate)
- What are your expectations towards returns on your investments? (i.e. how much returns will you be satisfied with)
- What is your time horizon for the investment? (e.g. 5 years, 10 years, etc.)
- Do you have the flexibility to sell the investment in the event of emergency?
- How can you monitor the performance of your investments against your changing needs?
Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)
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