The financial markets are in a state of chaos at present, unhinged by widespread political uncertainty. While the consequences of global, geopolitical tension and a changing European Union are impossible to predict, media sensationalism is causing many to fear the worst and sending a state of panic throughout the UK, the U.S and the single market. With cross-border and international deals also declining as investors seek flight, it is difficult to know where to commit your money in the current climate.
3 Considerations when Building Investments
If you are able to step back from the madness and see things through a clearer perspective, however, you will quickly understand that underlying laws which govern change in the financial markets will continue as usual. This means that rather than focusing narrowly on wider, economic factors, you should instead select investment options and build a portfolio to suit your lifestyle.
Here are three steps you can take to achieve this: –
1. Evaluate your Disposable income levels
Ultimately, it is important to evaluate your levels of disposable income prior to choosing an investment option. After all, you cannot trade with money that must be committed to bills or other expenses, so the amount of freely available capital that you have will dictate your investment strategies. If you have minimal income, for example, it is better to invest in low-risk options such as dividend investments, as these deal with growth blue-chip firms and are known to deliver regular returns.
In contrast, those with higher levels of trading capital may prefer to diversify and invest in higher-risk derivatives and entities such as the forex market.
2. Consider your passions and areas of knowledge
In most markets, knowledge and understanding are an investors’ core weapons. This ties directly into your lifestyle, particularly if you base your investment choices on sectors that you are passionate about or knowledgeable in.
Let’s say that you have an innate understanding of the automotive industry, for example, and regularly keep up-to-date with the latest innovations, trends and events that are shaping the marketplace. You can use these attributes and habits to inform your investment decisions, enabling you to capitalise and improve your returns over time.
3. Remember your Pension Plan
When we discuss investment options it is all too easy to overlook our pension funds, which are often taken for granted as contributions are made automatically. The type of pension plan that you invest in will have a huge impact on your future, however, so it is important that you select an option which is tailored to suit your future lifestyle plans. Take SIPPs (self-invested pension plans), for example, which are hosted by Bestinvest and other wealth management firms. This type of financial product affords you greater flexibility in terms of how you access your pension funds, whether you wish to initially withdraw a lump sum or commit all of your capital to regular, weekly payments.
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