How to pick an investment
How do we actually pick an investment? How do we know what’s going to perform well? These are questions we hear a lot at SOTM and they’re also questions the team at Sharesies is asked a lot too. So, instead of leaving these questions unanswered, here are five tips for picking an investment - we can’t tell you exactly what companies you should be investing in (that’d be illegal), but we will be helping you learn how we choose investments suited to our goals and values!
Establish your risk profile
To know what shares to choose you need to know who you are, what level of risk you’re able to take on and from there you’ll be much more equipped to choose an investment - because you’ll know your limits and the level of risk you can front, both financially and emotionally.
Do your research
We love uncle Bill, but uncle Bill doesn’t actually know what’s best, even though he’s really passionate around the Christmas lunch table. Instead, it’s a smarter idea to take matters into your own hands. Rather than taking ‘tips’ from people who probably shouldn’t be giving them, read up on the companies you’re looking at investing in. Reading through annual reports is a really good way of seeing what companies are up to and what they have in store, but if you’re new to investing and find it hard to wrap your head around, don’t dismiss seeking professional advice for their input.
Remember your values Sometimes we forget that when we invest, we’re actively contributing to the financial success of the companies we invest in. For that reason, many people are reading up on how they can invest ethically and support industries and companies that they really believe in. Before you invest, make sure you’re comfortable with what you’re investing in.
Does it help you diversify?
When you’re choosing investments, consider how they fit into your overall portfolio and diversification plan. Diversification allows us to safeguard ourselves from market fluctuation, because we have fingers in various pies, instead of all of our fingers in one pie (a messy metaphor but a metaphor nonetheless).
Start smaller Starting out your investment journey by using a platform like Sharesies can be far less intimidating than navigating share markets all on your own! Sharesies is an investing platform that lets you invest in ETFs and companies across the AU, NZ and US share markets, and you don’t need to invest thousands - you can start with 1 cent. It’s a great way to start small and build up your confidence and investing strategies!
***Please remember our blogs aren’t intended as financial advice - they’re intended only as a starting point to give you a little extra info! For more in-depth advice catered to your personal financial position, please see a certified financial advisor.