It All Depends...

Who, what, where, why are great questions to ask ourselves whenever we are facing major decisions. Obviously no one makes a decision to take the road of ‘bad decisions’ but how do we get ourselves into a mess at times?

A proverb says ‘A wise person gets all the facts before they make a decision.’ If that is true then could it be true that a ‘foolish person does not get all the facts before they make a decision’.

When we jump into things or don’t slow down to ‘look before we leap’ we almost always make the wrong decision. When we take our time and get wise counsel plus get the facts we tend to make much smarter and intelligent decisions. I think as you get older and hang out with more experienced people you start to slow down and realise that if a deal is a good deal today it will most likely be there again tomorrow and if it is gone, trust me there will be another deal!

I would rather miss out on a ‘deal’ and be wrong than to leap into something and regret it later.

One question leads to lots of questions.

Recently I got an e-mail from a person who attended one of our seminars and they asked me a couple of great questions. I thought I would share the questions and my response.

I want to start investing, what is the best investment to get into?

It depends on a lot of things!  What are your goals? Is the purpose of the investment for a deposit on a house or car or Pension?  How do you feel about market fluctuation? Will you lose sleep over the ups and downs of the market?

What is your age? Are you married or single? Do you have children? How much are your debts? What is your income? If you were to invest, how much do you currently have and how much per month can you comfortably afford?

So, as you can see one simple question leads to 9 questions! (And I am sure there are still more)

Their next question was, how do I start?

Again, it depends!

Are you an aggressive or conservative person when it comes to risk?

Firstly do you have a savings account now for emergencies? There is nothing worse than getting started on a long term investment plan, the market drops and you have to liquidate the account because you had no emergency account. So, first get £1000 in a short term savings account.

I know you want to get that big return and not bother with that silly .05% savings account! You want to start investing like the big boys! Yep and that is where many people go wrong by not getting the foundation in place for emergencies and downturns in the market.

Before you can get to £100,000 or a million pounds you have to get the first £1,000. Before you can become a Millionaire you have to first become a Thousandaire. Becoming a Thousandaire or Tenthousandaire is ‘on the way’ to becoming a Millionaire.

Now for a more generic answer, you can invest in all kinds of things but if you want to talk about the things I have personally used and which are easy to understand then investment funds, sometimes called mutual funds, are a great place to start. These are investment portfolios that invest in stocks, bonds, etc and you can buy into them for small amounts on a monthly basis and do it using something called pound cost averaging. There are funds that are conservative and also aggressive and this is where you need a risk profile to determine what is right for you. Guess what? There are about 10-20 questions in a risk profile that leads you to the right investment for you. It is not wise to invest in funds like this for less than 5 years because they are typically meant for long term and can fluctuate.

The next possibility is property investment where the returns can be good but you need to connect with someone who really knows what they are doing or research the knowledge yourself. As with most things we want to do or learn in life there is a price to pay but the good news is that there are plenty of books and good resources out there to learn from (there is also a lot of rip off stuff too!).