What To Consider When Deciding To Trade
YOUR CURRENT AGE
The younger you are the more risks you can take and the longer you have to recover from mistakes by working or accumulating assets. For the middle-aged and above, you don’t have this luxury so a more prudent approach is called for.
YOUR FUTURE PROSPECTS
Your career aspirations and inheritance and the income stream these are likely to deliver. If you’re not single, obviously you need to consider your partner too.
YOUR FINANCIAL RESPONSIBILITIES
Your children, a non-working spouse, aged parents, your mortgage or rent and other debts like credit cards and personal loans.
THE TIME REQUIRED TO MANAGE YOUR INVESTMENTS
The sources of information you’ll need to make the right decisions. If you want to pay others to invest on your behalf, consider managed funds. If you don’t want to pay the fees and are prepared to keep an eye on your investments, it’s cheaper to do it yourself.
YOUR RISK PROFILE
Assess how much risk you can sustain and the returns required over time. Are you looking for capital appreciation or a good dividend stream to live on right now, or a combination of both? Usually, the higher the return, the higher the risk.
Reassess your circumstances regularly and reset your objectives accordingly.
WHAT ARE YOU LOOKING FOR?
YOU ARE THE ONLY ONE WHO KNOWS WHAT YOU WANT
Unless you set your investment objectives (or goals), the chances are you won’t reach them. Your goals may include home ownership, financing your children’s education, buying a business and of course, a financially secure retirement that doesn’t mean a drop in living standards.
Write down your goals with an estimate of costs and time required to achieve them. If these constraints seem unrealistic, prioritise these goals, keep the list and constantly evaluate your progress.
Devise a strategy to meet your goals. Do a budget to establish your financial position (assets less liabilities). Take a look at your recent history to establish your income and expenses for the previous few years – this will give you an indication of what you’ll need in the coming years. Now establish a systematic and realistic savings and investment plan.
YOU MUST SPEND LESS THAN YOU EARN
It doesn’t matter how big your salary, how small your inheritance or the size of your yearly bonus. The only thing that really matters is the difference between what you earn and what you spend. That’s why it’s important to do a budget. As a rule of thumb and depending on your age, most financial advisors would recommend saving at least 10% of your net income (after tax income) every month. If it’s not a habit, it’s not going to work.
INVEST INTELLIGENTLY
Take control of your own investments
If you’re investing, you have two choices – you can make the decisions yourself (direct investment), or you can pay someone to make them on your behalf (a fund manager or financial planner).
In certain circumstances managed funds are great, although entry and management fees are often high. It’s been proven that a private investor can do exceptionally well. You have all the advantages – agility, speed and low running costs.
LET YOUR MONEY DO THE WORK FOR YOU
Compound interest is one of the most powerful factors that will help you. We recommend you finetune your portfolio regularly and keep investing to give your money time for compounding to kick in. If you follow these basic laws you’ll do pretty well.
If you want to take control of your financial future, and you want to partner with an educational company who teaches specifically designed techniques to ensure you will be profitably trading not just today, but in ten and twenty years time, welcome to FMI Trader.
The key to ensuring the education you receive will deliver the returns you want is in the quality content and practical hands on support you receive throughout your education.
