Growth & Jobs | Pay key attention to your investment decisions, says financial adviser

Making investment decisions should not be taken lightly, says financial adviser Gayon Knight, noting that given recent market events, many persons may be concerned about whether their investment is safe.

Knight, who is assistant vice-president of sales and client services at JN Fund Managers, advised potential investors to consider the following four things before investing:

DRAW A PERSONAL FINANCIAL ROAD MAP

“Before you begin investing, take an honest look at your entire financial situation, especially if you’ve never made a financial plan before. The journey to successful investing is figuring out your goals and risk tolerance with the guidance of a financial adviser,” she noted.

With the guidance of a financial adviser, executing and following through on your investment plan will help individuals to financial security and to enjoy the benefits of managing their money, she added.

EVALUATE YOUR COMFORT ZONE IN TAKING ON RISK

Knight noted that there is some level of risk associated with nvestments. With the help of a financial adviser, the client’s risk tolerance can be assessed and investments that are in line with the client’s risk profile will be selected. For example, if someone is recently retired, investing in stocks, which are considered high-risk, may not be the best option at this time. They may consider low-risk bonds or repurchase agreements. On the other hand, if a younger person is investing for the long term and wants to take on more risk, there is a potential for a greater investment return.

AN APPROPRIATE MIX OF INVESTMENTS IS A BETTER OPTION

By having a mix of investment instruments from the different asset classes, such as money market instruments, stocks, bonds, real estate, an investor can help protect himself or herself from significant losses, Knight noted. An example of a pool of investments that offer this benefit are mutual funds.

Mutual funds are pooled investments that allow investors to experience a more diversified approach to yielding greater returns on their money. They are professionally managed investments that are being recommended globally.

CREATE AND MAINTAIN AN EMERGENCY FUND

Knight advised that putting in place an emergency fund is also crucial. This emergency fund, she said, will come in handy in times of crisis or difficulty, such as sudden unemployment. Up to six months of one’s income in savings is advisable, she said.