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5 golden rules when choosing an investment

Fri 05 Apr 2019

Looking to invest? Check out these important things to consider.

If you have made the decision to start investing, it’s important to take the time to research the market and find the right product for you. Below are some golden rules to follow to help you through the process.

1. Higher returns = higher risks
If you don’t want to or can’t take any risks with your money then investing may not be right for you. The basic rule is that to improve your chances of better returns you will have to accept more risk. When you are selecting your investment product always consider the level of risk you are willing or able to take. Try looking for investment products that can help you manage risks by offering some guarantees to protect your growth.

2. Be diversified
Putting all of your money in one type of investment can be risky, a bit like putting all of your eggs in one basket. You can reduce this risk by choosing a product that spreads your money across a mix of investment types and sectors. This is called diversifying and works on the basis that when prices in one investment area may be falling they could be rising in another. This can help to balance out the risk and return on your investment.

3. Think long term
The longer your money is invested the better chance it has to grow in value and produce a favourable return. There are of course no guarantees but keeping your investment for at least 5 years, or ideally 10 or more years, increases the potential for better returns. This is because there’s more time for your investment to recover from any short-term drops in value. If you think you may want access to your money in the short term you might want to consider a cash savings product instead.

4. Let the experts help
Investing does not need to be complex or time consuming. You can of course choose to manage your investments yourself but this does take time and takes a certain level of expertise. If you are new to investing or short on time, consider looking for an investment product where the fund and your money is managed for you by experts. If you’re unsure about which type of investment is right for you, think about contacting a financial adviser for help and support.

5. Keep an eye on your investments
You should take time to review your investments on an annual basis to make sure they are on track. This will allow you to monitor how they are performing and make any necessary adjustments to help you reach your savings goals. Remember the value of investments can vary all the time as the markets fall and rise, investing over the long term can help minimise the impact of this. If you are constantly worrying about how your investments are performing then it might be time to review whether this level of risk is right for you.

Police Mutual offer a range of savings and investments products. Whether you want to save regularly or invest a larger amount our products could help meet your needs. To find out more about our range click here or call the team on 0345 88 22 999.

Police Mutual Assurance Society Limited is an incorporated friendly society. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS.

Type of article: Articles
Category: Wellbeing

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