When making an investment decision, there are many factors to consider. Brian C Jensen says to get the most out of your investment, it is important to be aware of these key considerations and evaluate each one carefully.
Here are 15 things to look for when making an investment decision:
1. Risk tolerance.
Before choosing any particular investment, it is important to take stock of your risk tolerance – how comfortable you feel taking on risks in order to potentially earn higher returns. Some investments will come with greater risks than others, so make sure you have a clear understanding of what you are willing and able to take on.
2. Financial goals.
Your financial goals should also play a role in your decision-making process, as they can help determine which types of investment strategies are right for you. For example, if your goal is to save for retirement, you may opt for more conservative investments that offer a steady, reliable return on your money.
3. Time horizon.
Along with your financial goals, the length of time you have until achieving those goals can also help inform your investment decisions. If you have many years before reaching a particular milestone – such as retirement or college tuition – you may be able to afford more risk and take on investments with potentially higher returns in order to grow your savings over time.
4. Current assets and liabilities.
In addition to taking stock of your other financial commitments and obligations, it is important to consider your current assets when making an investment decision. This can help you determine how much risk you can afford to take on and what types of investments might be the most appropriate for your situation.
5. Financial resources.
Along with your current assets, it is important to consider how much money you have available to invest. This will help ensure that you do not overextend yourself and put yourself at risk of financial hardship in the event of a market downturn or other unforeseen event.
6. Earnings potential.
Brian C Jensen says in addition to evaluating the risks associated with various types of investments, it is also important to consider their earning potential – or how much return they may offer on your initial investment over time. This can be challenging to predict for certain types of investments, but taking the time to research and understand the potential earnings of an investment can help you make a more informed decision.
7. Market conditions.
The current state of the markets can also play a role in your investment decisions. If you are investing in stocks, for example, you may want to pay close attention to market trends before making any purchase or sale. Doing so can help you minimize losses and maximize gains in accordance with your financial goals.
8. Investment costs.
Investment costs can vary significantly from one investment to another, so it is important to take them into consideration when making your decision. Some common costs include brokerage fees, commissions, and account maintenance fees. These costs can eat into your returns, so be sure to factor them into your overall decision-making process.
The liquidity of an investment can also be an important factor to consider, particularly for those who need to access their funds on a regular basis. Some investments – such as real estate or private equity – may be less liquid than others, so it is important to take this into account when choosing your investments.
Finally, it is important to consider diversification when making an investment decision. This refers to the practice of spreading out your assets across multiple different types of investments in order to minimize risk and protect yourself against market downturns and other negative events. By diversifying your portfolio, you can help ensure that you have a more stable financial foundation over the long term.
Brian C Jensen says as you can see, there are many different factors to consider when making investment decisions – from your financial goals and time horizon to market conditions and diversification. By taking these considerations into account, you can make more informed choices that help keep your finances on track over the long term.