Maintaining a clear purpose for your investment strategy
Without a plan, investors are prone to making knee-jerk reactions when there are swings in the market. A well thought-out investment strategy provides the guidance needed to help you stay on track when inevitable market fluctuation occurs. It can also point you towards the types of investments that best align with your financial goals.
Investors are continually faced with ever-changing market conditions, an often overwhelming amount of information from the media and an increasing number of investment choices. It’s not surprising that the world of investing can seem complex.
By maintaining a clear purpose for your investment strategy, you help yourself stay on track and confidently navigate the ups and downs of the market.
When developing your investment strategy, consider the following factors:
1. Your investment goals
Specifically, for what or whom are you accumulating funds? Your investment goals will help you determine suitable investments.
2. Your time horizon
How many years will it be until you need to use what you have invested? Longer time horizons may provide flexibility for more aggressive investment choices.
3. Your tolerance for risk
Take your broader financial situation into account, and consider how comfortable you are with varying degrees of risk as you pursue your investment goals.