Are you facing trouble in deciding where you should invest your money? Then don’t you worry because you are not the only one who is overloaded with tons of stocks, bonds, commodities, mutual funds, and exchange options out there.
Almost everyone who is new to investing feels so much overwhelmed by all these choices so much that they are never ever able to actually decide where to actually invest their money.
Hence, they keep on delaying due to not been able to come to a judgment. You all will be amazed to know that the answer to your question is totally dependent on two factors.
Factors to Consider Before Investing
There are many factors you need to consider before opting for options in investing. The most common factors are:
- The time constraints for goals.
- Risks you are ready to take.
Let’s pick the first time horizon factor. If you are going to investing for retirement only then stocks are the best option ( again, investing in mutual funds is highly recommended).
Investing in stocks helps you outrank the inflation growing over time. Later you can also start doing bonds which is a safer investment than stocks.
On the contrary for those lurking for short terms investment – less than 5 years – should not go for stocks. Short terms bonds or Money market investments are the best options instead.
Another factor – Risk tolerance. Risk bearing capability is required because the market goes up and down and if you are vulnerable to nervousness when it does the closing, you are better off investing directly in stocks. Instead, go for investments that are more conservative with fewer allocations of stocks.
Our strongest recommendation to beginners is to invest in stocks through mutual funds, index funds, etc.
If you want to scratch on your own too then you can do trading by dedicating 10% of your portfolio or even less to individual stocks for better exposure.