Wealth management is not exclusive to those within a certain income bracket, and rightfully so. As banks around the world build a strong eco-system of private banking capabilities, anyone who wishes to get a better handle on their finances can start or level-up their investment journey.
However, as banks develop their skills and expertise in assisting clients, individuals may still find certain aspects of investing difficult. Among a sea of financial advice and markets, it can be tough to know which to choose and invest money in, and the overwhelming amount of information available online can end up hindering instead of helping us.
Below, we have come up with 5 tips that can be useful for both new investors and those looking to optimise their current investments.
1. Invest with an objective in mind
Having clear and defined objectives is crucial in wealth management, and some primary objectives include saving up for retirement, to send your children to university, and to buy a home. Having objectives is important as they help you set up investing goals, which can not only encourage you but inform your decision-making.
When you are setting investing goals, it is crucial to ask yourself what you realistically expect from your investments and how much risk you are comfortable with. You should also set a timeline for when you expect to reap returns. Lastly, it is vital that you understand the financial vehicles through which you are investing to ensure everything aligns with your strategy and can meet your objectives.
2. Pick a growing sector or a business with growing financials
If you would like to invest in stocks or ETFs, one thing you should keep in mind is that you are not just buying an abstract concept on a digital marketplace. When you purchase a stock, you are banking on an actual business, and you want to make sure that the company’s outlook is positive in the long term.
Beyond reading market charts and mastering how to navigate your investment platform, you should take time to learn about different companies and sectors, their current outlook, and potential future developments. You should also keep an eye on the news. Ideally, your investments should be protected from political and economic turmoil, which takes us to the next point.
3. Diversify your portfolio
It is always wise to not put all your eggs in one basket no matter how much you believe in your judgement. The truth is, there are no guarantees in the world of investing. Unexpected developments can happen at any time, and they can have a significant impact on market performance.
Investors should diversify their portfolio, and they can do so by setting aside capital to be invested in different products and sectors. This helps them avoid the risk of having everything wiped out at once in case of a bad quarter.
4. Go in for the long haul
Investments take time to grow, and this is common knowledge amongst financial experts. The CEO of Saxo Capital Markets APAC, Adam Reynolds, once wrote an article on why time in the market is better than timing the market. In it, he expressed that timing the market is incredibly hard, for investment rookies and experts alike. He also said that it is not a fool-proof strategy simply because no one can consistently predict market movement – not even full-time professionals with access to the best resources.
Instead of focusing on short-term gains, investors are more likely to reap better results when they commit to their investments and seek to build healthy portfolios. There may be periods of turbulence in the market from time to time, but long-term investors generally do not suffer from them and thus have no need to keep their eyes glued to market charts all the time either.
5. Always keep learning
Finally, investors will realise they can always do better when they approach the market and their investments with an open and educated mind. By learning about new concepts and catching up with the latest trends and news, investors can continually optimise their portfolios to make the most out of them.
Most people understand that investing takes time and money, which is true. However, it also requires consistency and patience, which is something that many lack. When you set clear objectives for yourself and participate in wealth management knowing what you want and how much risk you can take, you are much less likely to make spontaneous decisions and jeopardise your financial future.