If you don’t seek professional advice before you invest your money, it’s even more important to do this exercise on your own, by asking yourself and writing down the answers to a series of basic questions. For example:
What are my investment goals? Do I just want to preserve the amount of money I invest at the start, or do I want to make my money grow over time? Should my investment provide me with regular income?
What is my investment horizon? In other words, when do I need the money I invest today? Do I need it to build a house in three years’ time? Do I need it to finance the university studies of my children in 15 years? Or do I need it to maintain my standard of living when I retire, in 30 years or more?
Depending on your age, current stage of life, family commitments and financial situation, you will have different answers to these questions. Your answers, as well as your experience with investing and how much you know about financial products, define your investor profile.
Your investor profile will guide you when choosing your investment strategy. It will help you to avoid entering into investments that are not appropriate to your personal situation.
