Independent financial advice - investing for the future

Source: www.mraltd.com/

Identify your aim

Your first priority is to decide what you hope to gain from your investment. Before you take independent financial advice, you need to think about whether you want a huge profit margin or a steady regular income. Investing wisely can bring large returns and the important things an investor needs to know are the duration, risk, returns and liquidity.

Duration

Duration simply means the length of time you are prepared to leave your money in the investment. Independent financial advice will help you to decide whether to invest short term or long term.

Risk

Every investment carries an element of risk, as independent financial advice will reveal.

* Inflation risk: your deposit may be affected by inflation * Principal risk: loss in the initial amount you invested. * Interest Rate risk: fluctuation of the price of stocks or bonds due to a fluctuation in the rates of interest. * Market risk: factors outside the control of companies like changes in the economy, government policy or market trade. * Credit risk: when you invest in bonds and the company is unable to make interest. They return your entire principal and your investment has not yielded returns.

Rate of Return

The rate of return is the profit or loss you make on your investment. Generally speaking, investments that carry a higher risk also yield a greater rate of return, while safer investments carry a lower rate of return. Banks and building societies are among the safest places for your investments, but they are also likely to yield the lowest rates of return, whereas independent financial advice shows that energy sector stocks have risen a great deal over the past few years. Treasury bonds and other government related bonds are considered safe for long term investment.

Liquidity

Independent financial advice will explain that liquidity is the conversion of assets into cash.

Diversify

Independent financial advice suggests that you should try to diversify your portfolio rather than putting all your eggs in one basket. By diversifying your investments, you should ensure that your margin of profits is balanced. If you are a first time investor you may prefer to opt for managed investments rather than to invest directly yourself. You will incur management costs but this could be counterbalanced by the profit or loss on your investment. Good independent financial advice can point you in the right direction to a balanced, suitable portfolio of investments that's appropriate for you.

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