Benjamin Graham once said, “successful investing is about managing risks, not avoiding them”. If you think carefully about it, it holds to be true. It means that investments are always risky, but how one can use their skills and knowledge to minimize the risks matters the most says Paul Haarman.
There have been many cases where investors have invested money and lost it all. Does it mean the investment is a poor decision altogether? Well, one can’t really say that.
To be able to invest successfully and yield profitable returns, multiple factors influence. It is the fundamentals of investment that can play an important role in saving an investor. Even experts like Paul Haarman emphasize careful investment.
Here are some core factors that can improve the way you make your investments and can even result in better returns over time.
Set an objective
An objective will give a reason for the investment and will influence all the factors afterward. For instance, some investors try their hands at investing only for the sake of trying it, whereas some investors focus on profits. Some people prefer to invest just to keep the money safe.
Expected time for returns
It is an important factor, as it determines the time an investor can manage without expecting any returns. Investors that look forward to quick returns look forward to short-term investments such as purchasing shares, gold, savings account, etc. But those who look for long-term investments prefer choosing a property, equity funds, real estate, and more.
Investments are also age-centric in many cases. Investors invest money for planning their future. Long-term investments which offer gradual returns are preferable in such cases. Moreover, in old ages, it is also recommended to avoid making aggressive investments as they have fair possibilities of unsure returns. Whereas young age investors still have time to continue with their jobs and compensate for the losses.
According to experts like Paul Haarman, risk tolerance is one of the most crucial factors which can affect an investor irrespective of their age. It concerns the number of uncertain returns an investor can bear. Generally, investing giants such as multi-millionaire businessmen can afford to have a few aggressive losses. At the same time, it isn’t the case for an investor who just used his savings money for the same.
However, most investors try for minimum risk tolerance as it promotes the skill of careful investing irrespective of the capital value available with an investor. After all, no investor wants to lose their appetite and sleep over the losses.
Investments made considering all the above-mentioned factors are less risky and worth expecting returns.
Careful investments come from being well aware of the current situation of the market as well as the individual. Investments can turn fruitful if the priorities of the investor are clear. Being cautious about the factors that can influence returns does not guarantee absolutely any loss at all, but it can definitely minimize it to a significant extent.