Inflation will take 3.8% of value off your money’s value each year. As a result, when you’re investing in the markets, you have to be prepared. This is because investments are one of the few places that you can grow your money faster than it can be outpaced by inflation. In this post, we look at the top things for you to remember when you’re making an investment.
#3 Look for Tax Efficiency
Earning money through investing is difficult. There are so many different variables at play that navigating the markets is tricky.
As a direct result, you need to maximise any gains possible. This can be done through tax-efficient investments. As always, tax can be complicated and, to make sure the process is legal and above board, you should employ an expert such as Sanlam Private Wealth to help you. This way, you can ensure a tax wrapper is being used to your advantage.
#2 Consider Your Diversity Strategy
Whenever you’re investing, you need to remember that you’re exposing yourself to risk. As such, you need to carefully consider diversification in your portfolio. If you invest too heavily in one sector or market, then you could be unprotected if the markets move against you.
For example, if you were to invest in both BP and Shell and oil prices took a dive, you’d likely lose a lot of money. However, if you only invested in one of the companies, as well as investing in safe haven assets such as gold and currencies, you’d be far better protected if one of your assets moved against you.
To protect yourself, create a diversification strategy before you begin trading and stick to it carefully. Then you’ll be protected should the worst happen.
#1 Focus on the Long Term
Finally, you need to focus on the long term impact of your investments. In the short term, markets can be incredibly volatile. However, the best investment portfolios are the ones that are stable for the long term, as this gives them the best chance of success.
It’s common for markets to fluctuate over days and weeks. The important thing is to not react too hastily and withdraw. Monitoring your investments closely may be essential, but having a level head is just as important. See through the short term turbulence and, providing you’ve done your research, you should be rewarded handsomely.