Investment Thinking - 5 Points
1. Understanding your risk profile Know your risk appetitie for investments, are you conservative (hope not to loose money), balanced (can lose some money) or aggressive (can lose majority of your money)? Shares and investment funds are risky but can lead to quicker returns. Bonds and fixed deposits are comparatively safer but have low returns. Do a risk profile. However, risk profiling does not consider your ability to take risks or risk capacity. If you have a lot of debts, you are unable to take high risk no matter how 'aggressive' you are as an investor. Risk capacity indicates one does not need to do high risk investments because he or she may be close to meeting their financial goals. Do know how much returns is good for you and do not invest beyond your risk appetite or risk capacity. 2. Do dilligently review your investments Review your investments and read the fine print on an investment contract. Avoid contracts that say you may loose your 'shirt and shorts