For some people, investing is the safest way to protect their assets. This is because the value of money will get smaller over time as a result of inflation. Currently, there are various types of investment instrument that can be selected. The principle of investment is high risk high return. This means that the higher the profit, the greater the risk. Therefore, before investing, it’s good to find out first some tips on choosing an investment instrument so you don’t take a wrong step.
1. Check Financial Condition
The first thing to do before investing is check your financial condition. Is it true that your finances are healthy and stable? Invest if you have.
2. Determine Capital
After you are sure that your financial condition is in the healthy category, tips for choosing the next investment instrument are to determine how much money or capital you will set aside to invest. This amount of capital will determine what type of investment you should choose. For example, you only have hundreds of thousands of cash, you can choose mutual funds. If you have tens of millions of capital you can invest in land or gold.
Read also: How to Determine Period of Saving?
3. Set Financial Goals
One of the important things in investing is determining investment objectives. There are many investment objectives, for example, for children’s education, for preparation for old age life, for renovating houses and so on. With a clear goal, you can decide the investment period to take. For example, short term such as deposits or long term such as stocks, land and property.
4. Choose a Safe Investment
Even though it sounds conservative, choosing a safe investment is very important so you don’t fall into a huge hole of losses. There are those who think that saving money or investing is the safest way to save money, but that is not necessarily the case. Please note that in saving money, there are thieves who can secretly take your money without realizing it, namely inflation.
The rate of inflation can change every year. If you are currently saving one hundred million, and inflation per year is 3%, then a few years from now, the value of that money will have changed. It is no longer a hundred million, but is shrinking. Therefore, anyone who is going to invest or secure assets must be careful in choosing the type of investment.
5. Pay attention to the level of investment risk
Every investment instrument has a risk. It is well known that the principle of investment is high risk high return. If you are a conservative type, then you should choose an investment that is considered the safest, for example investing in the real sector such as gold or land or you can choose a time deposit.
If you are the aggressive type and dare to take risks, there’s nothing wrong with trying investments that provide high returns, but you also have to be mentally prepared if the investment fails. Even so, be wise in making decisions.
6. Diversify your investment
Investment diversification is very important. The goal is to minimize the level of risk if something unexpected happens to the chosen investment instrument. Like the saying “Don’t put all your eggs in one basket.” The point is that by choosing several investment instruments, the risk of failure can be managed better.
Those are tips for choosing an investment instrument that can be taken into consideration for you beginner investors. So that you stay safe investing. Interested in investing?