Simple investment rules that every professional should follow

While the world of investments may seem impenetrable for all but a select few, this is not actually the case. More and more people are turning to investment as a way of preparing for their future and earning additional money. However, as with all things in the banking and investment world, there is a chance that your returns may be lower than the capital you invest. That’s why the professionals follow a few simple rules to minimise their risks. 

At Stable Rise, we want to share these with you:

 

  1. Diversify your portfolio

Any experienced investor will tell you that it is essential to invest in a range of options. If you only invest in one area and there is an unexpected market crash, then you could lose a lot of money. By investing in a range of sectors, you can minimise risk while being able to potentially capitalise on a range of external market forces. A mixture of fixed asset investments and current assets is usually advisable.

  1. Only invest what you can afford to lose

Although with professional help you are not likely to lose money, there will never be any guarantee that your investments are 100% secure. Therefore, it is essential that the money you invest is money you could afford to lose. However, by investing sensibly and researching your investments first, you are likely to make better choices that will maximise your return on investment.

 

  1. Consider tailored investment solutions 

If you have set investment objectives, then there are a number of companies who could identify and develop tailored investment solutions that are created specifically for you and your situation. By working with a company that has the same end goals as you, you are likely to form a symbiotic relationship that allows you to gain the most from your investments, in both the short and long term.

At Stable Rise, we pride ourselves on identifying and creating personalised investment solutions and plans that fit perfectly with your own investment objectives. Whether you are new to investment, or a seasoned professional, our experts can cater for all of your needs.

 

Top 5 tips for people starting to invest in 2019

When it comes to managing your money and saving for the future, investing is vital. However, successful investing is not always easy to achieve; with so many companies and schemes out there that are desperate for your money, how can you know where to place your funds? And what tactics can you use to ensure you get the most benefit from your investments?

 

Hopefully, this article will provide the answers you are looking for.

 

  1. Be open-minded

This is absolutely crucial. Successful investment requires you to do more than simply stick with industries you are already aware of; you need to branch out and explore a variety of opportunities. Focus on the future and speak to people that have knowledge of specific sectors and industries.

 

  1. Start small

It can be tempting to throw yourself into the investing game head-on, but rarely is this the best choice. Start off small, get a detailed understanding of the nature of investing, and then build up slowly.

  1. Stick with a strategy

Once you know what you’re doing and have acknowledged where you want your money to go, you have to come up with a strategy. And, once you do that, it’s essential to keep faith in your strategy. Long-term investing will see you encounter ups and downs, but the best way to achieve success is to stick with funds you believe in.

 

  1. Steer clear of penny stocks

It can be tempting to invest in penny stocks because they are so cheap and, therefore, it would initially appear that there is less to lose. However, this is not the case. Penny stocks are often a riskier prospect than higher-priced stocks because they do not tend to be as stringently regulated.

 

  1. Diversify

You are less likely to encounter significant losses if you spread your investments. By developing a portfolio, you will be able to invest in a number of funds or companies, and can subsequently track how they perform. Further down the line, you may want to put more money into a specific investment or move away from a particular company, but this should only be done after a lot of careful consideration.

 

What’s the difference between a fixed and current asset?

For anyone who is new to investment, learning all of the differences between key terms can be tricky; however, one word variance can change the meaning of the phrase entirely. One of the key things to know right at the beginning is the difference between fixed and current assets, as these are two things will frequently crop up in discussions.

The basics

The basic differences between fixed and current assets revolve around how liquid the assets are, with liquidity here meaning how quickly the asset can be converted back into cash. The faster this conversion takes place, the more liquid it is. Generally speaking, if an asset can be converted into cash entirely with a year then it is a current asset, and those which take longer than a year are known as fixed.

So what does this difference mean?

The liquidity of an asset has a significant bearing on its use. Because fixed assets can’t easily be converted back into cash, any item which helps to produce goods and services, such as machinery, is counted as fixed assets and is viewed as producing long-term returns for the company. However, companies will often hold current assets, such as stock, as it helps them to manage their cash flow, which will then be used for paying wages, investing in new goods/service and for covering any unexpected problems.

So what’s best for investment?

Investment works best through personalised services, and tailoring investment opportunities to meet your specific needs. As such, fixed asset investment or current asset investment may be right for you, depending upon your circumstances – it all depends upon context and there is no hard and fast rule about the ‘best’ investment. However, for customers who are looking for a long term steady return on their capital, fixed asset investments could be the best way forward. Equally, investors may attempt to spread their investments over both fixed and current assets to ensure that they minimise the risk of their portfolio. Diversity is key, and it is unwise to invest everything in only one pot. A tip from insiders though – never invest without proper research first!

 

The danger of putting all of your eggs in one basket

When it comes to investing, you’ve no doubt read about the value of diversifying. Numerous websites and financial experts say that putting all of your eggs in one basket is a bad idea, and they are indeed correct. However, what they often fail to do is dig into the details and explain exactly why this is the case.

So, why exactly is it vital to have a varied portfolio?

 

Minimise risk

The primary reason why diversification is a good idea is because it minimises risk. If all of your investment is tied to one specific fund or company, then your fortune depends entirely upon its success. If the company does well, then you could earn a lot of money: however, if the company fails, you could lose your entire investment. It’s an incredibly risky strategy.

By spreading your investment across numerous funds, shares and bonds, you stand the best chance of riding out any periods of financial uncertainty, and therefore you have less chance of losing significant sums of money.

 

Generate returns

Another huge benefit associated with placing your eggs in numerous baskets is that your returns will be generated across a number of funds. This means that if one fund is performing particularly well, you can transfer money from one fund to another, or you can take money out of one fund to spend how you wish while leaving other investments alone.

If you have enough variety, you will be far more likely to have at least a few investments that are performing well at any one time. These strong assets can then cushion the blow should others do less well.

 

Tricks of the trade

Diversifying means investing in a number of funds or purchasing a range of shares. However, many people tend to simply stick with areas or sectors that they are already familiar with. This is rarely the best idea, because even if you have shares in numerous companies, but they are in a similar industry, you will likely encounter the exact same fluctuations at the same time.

The key to successful diversification is researching an array of geographies, sectors, markets and companies, and spreading your investments far and wide. However, it goes without saying that such research must be thorough and comprehensive.