You work hard for your money, so make your money work hard for you by investing
wisely. Whether your objective driving you to invest is to build a retirement nest
egg, pay for a dream holiday, home or your children's education, informed and conscious
decisions as well as the right investments can turn each goal into a reality.
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1) Set up a plan and stick to it
Like any journey that you take on a holiday, you have
to have a plan. Wondering how to begin? Just follow these simple steps...
i. Seek guidance from your Adviser
ii. Set achievable short and long-term short goals
iii. Determine your risk tolerance and time horizon. This will help you establish
what vehicles you can use to help you build the wealth you need by a specific timeframe.
iv. Decide what type of investments are suitable.
Key point: Remember to revisit your plan with your Adviser at
least once a year.
2) Make sure you spend less than you earn
This might seem like an obvious statement, but a significant
amount of people do not keep track of their regular spending habits.
A simple weekly or monthly budget is an easy and effective way to get a clear picture
of what you are spending your money on.
Remember, it doesn’t have to be a large amount, even a few hundred ringgit a month
can grow into a substantial amount of money over the long-term if wisely invested.
Bright idea:
Rather than paying your bills and regular expenses and then investing the left over
amount, make sure that the very first thing you do once you get paid is to ‘pay
yourself?a fixed amount of money that goes straight into your savings or investments.
3) Save and invest
People sometimes get confused about
the difference between saving and investing.
Saving is when you decide to hold onto your money for some time in the future instead
of spending it now.
Investing means putting your money to work so that it may earn even more money.
To make the most of your savings, it is essential to invest them.
4) Begin to save and invest early
Compounding your returns on money saved or invested when you
are young is the most powerful tool when it comes to saving and investing early.
In fact, for every 10 years you wait before starting to save and invest, you'll
need to save roughly three times as much every month in order to catch up.
So even if you have to cut back on your daily cappuccino or dinners out, make the
sacrifice. Putting away even a small amount each month will give you a leg up on
building the wealth that you need to be financially independent.
5) Invest in growth assets
Growth assets such as shares, property and equity funds are
some examples of investments that attempt to generate high levels of capital growth
and moderate levels of income over time.
These differ from 'income assets' such as cash funds that primarily provide a regular
income stream over a given period.
6) Use dollar-cost averaging to reduce risk
Dollar-cost averaging is an investment strategy whereby a
set dollar value is spent on investments at regular intervals, irrespective of the
price at any given point in time.
One benefit of dollar cost averaging is that it takes away the problem of attempting
to determine the ‘top?or ‘bottom?of the market.
7) Diversify
Another way to reduce risk is to diversify across many different
types of investment assets.
As different asset classes perform better at different times, it is impossible to
guarantee which sector will be the best performer each year.
A diversified approach to investing ensures your funds are spread across many different
assets, thereby removing the risk that you will choose the wrong asset at the wrong
time.
8) Invest to beat inflation
Inflation is the silent enemy that reduces the purchasing
power of money over time. Savings that earn little or no return are in fact losing
ground because the value of money reduces over time as prices increase.