1. SettingYourMoneyGoals
3 Factors whichdetermine yourinvestmentstrategy
You may be wonderingwhatisthe rightinvestmentstrategyforyou,butwithoutknowinganything
aboutyou,any advice on whichinvestmentsare rightforyoumay infact be the wrong ones.There are
basicallythree factorsthatdetermine whichare the rightinvestmentsforyou,theyare:
1. Your age
2. Purpose forthe money
3. Your risk profile
Startingwithyourage. It wouldbe rathersillyof youtoinvestall yourmoneyingrowthfundsif youare
aged65 because if the markettakesa dive suchas wasthe case duringthe 1987 sharemarketcrashand
to a lesserextent,the Global Financial Crisisduringthe early2000s youhave lesstime torecoverfrom
these setbackswhereas the youngoneshave time ontheirside.
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The purpose forthe moneyisthe secondfactor.
Decide whetheryourequirethe moneyinthe short-term,medium-term, orlong-term.
Short-termwouldbe uptoa year.
Medium-termis1-5years
2. Long-termislongerthanfive years
Short termexpenses would be, a bank account foremergencies, a holiday within a year, dental expenses,
or t pay for the kidsschoolingfora year.
Medium-termwouldbe savingsforacar.
Long termwouldbe yourretirementfund,savingforahouse deposit,orsavingforthe tripof a lifetime.
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Your riskprofile isadeterminingfactorinwhere youinvestyourmoney.If the thoughtof the
sharemarkettakingadive will give yousleeplessnightstheninvestinggrowthstocksinthe sharemarket
isnot for you.A betteroptionwouldbe managedfundswhere youwillbe givenachoice between
growth,balanced,andconservative funds.
It isimportantnot to getintodebtfor there isa cost to debtand that isinterest.Interestaddstothe
cost of goods boughtwithborrowedmoney,andthisaddsupto a fortune duringa lifetime of borrowing
for consumables.Thisiscalledbaddebtbecause the valueof the itemdeclinesovertime.
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There issuch a thingas good debtthoughandthis isyourfirsthome because the value of the property
increasesduringthe lifetime of the loanbuteventhisis notalwaysa goodoptionfor some people if you
live akindof transientlifestyle.
"Everyone istotheirown,"so onlyyouknow whatmakesyoutick so yourpersonal circumstancesare
the determiningfactorswhichgovernwhere besttoinvestyoursavings.
You mustdo your homeworkbeforeyouinvestinanything,whetherthatisthe sharemarket,managed
funds,orgold.There is somuch informationavailableonjustabouteverything,andthatincludes
3. finance.Itisjusta matterof learningthe ropesandhavingafinancial strategywhichsuitsyourpersonal
circumstances.
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Most people are able tosave moneybuthavinggoalsand selectingthe rightinvestmentsforyour
savingscan helpincrease yourassets andenable youtoreachyour goalsquicker.Inlife one size does
not fitall as far as decidingwhere toinvestyourmoney.
