Wealth Connexions provides a few key things you can do to mitigate your financial risk
Using your money for wealth creation can be incredibly daunting, especially when you’re unsure of how each market works and how your money is being used. Without a proper understanding, you’re more likely to make poor decisions that could impact you now and in the future. In order to lower the impacts of the gamble of wealth creation, we’ve outlined our top recommendations to get the most out of investing, no matter the market.
Use the Asset Allocation Strategy
This strategy refers to meeting a particular goal, such as growth, and behaving your assets around this goal. For example, if you’re aim is to increase a specific amount, you may choose to place the majority of your sum on stocks and a smaller amount on bonds. This allows you to get a glimpse of both worlds, without the risk of choosing only one. Stocks are particularly unpredictable, though they can fluctuate quicker than bonds. However, due to the lower fluctuation that bonds have, they have a lower risk of losing the original value of the asset, compared to stock. By using this strategy, you’ll have a higher chance of increasing your original value while holding a safety net, encase the investment falls through.
Use the Portfolio Diversification
Similar to the strategy above, this approach is about lowering the risk by investing in multiple classes of stock, instead of just a few. By branching out to multiple companies, instead of just one brand or organisation, you’re lowering the potential risks of your investment by being supported by other assets. If you buy stocks in multiple companies in different industries, you can decrease the chance of a potential loss. Investing will never be 100% guaranteed, but you can increase your chances of walking away with increased value by following this strategy. The market is unpredictable, and it should be treated that way. It’s important to do your research on the companies that you are considering beforehand, to further increase your chances of the investment doing well. You may not choose the right decisions all of the time, but by having a better understanding of the company’s history that you’re investing in, you’ll be increasing your chances of your wealth creation investments doing well.
Keep up-to-date with your Investments
We’re all individuals, hence, we may behave differently towards gambling or investment. Some may like to play the long game, others want to go hard and get out as quickly as possible, while others are consistently checking the stats to better themselves and their decisions. You can be all three, but you certainly need to be the third no matter the circumstance. By constantly checking the status of your investments, you’ll increase your chances of selling the stock during a potential rise. If you’re not up to date with your stock, you may miss the opportunity of a lifetime, and only find out through the news when it’s all sold and has lessened its value. You don’t want to be in that situation if you can help it. By checking the status of your investments weekly, or daily if you can, you’ll increase your chances of selling at the right time while also ensuring that you’re aware of how the investment is fluctuating currently. It’s a strategy that is incredibly beneficial all around.