Six key steps to long term investing
1.How much risk you can handle?
When you invest in the stock market, you make a trade-off between the possibility of losing some of your money in return for the potential to make more money. The idea is that the more risk you’re prepared to take, the higher the potential returns.
Finding a balance between the level of risk you can accept and the level of returns you want to achieve is central to making a good investment decision for yourself.
Importantly, there’s no right and wrong answer when it comes to working out your attitude to risk. It’s all about finding a balance that you’re comfortable with, so you can make your investments and still sleep at night, especially when the stock market ride becomes rocky.
If stock market falls make you nervous about your investments, speak to a financial adviser to review your investments and make sure that (1) you are clear about your attitude to risk and (2) your investments match your attitude to risk.
