Introduction
Sorting through all the advice about investments and finances can feel overwhelming, especially when you’re trying to find the perfect investment that matches your current financial situation and guards against inflation. In this blog post, we share some expert and experienced insights on how to build a healthy financial and investment portfolio that is sustainable and inflation-proof.
Understanding Your Pre-Investment Analysis
As a newcomer investor, the challenge of where to start in the vast world of finance, especially when bombarded with information often tailored to different regions can be daunting. Before embarking on your investment journey, it is crucial to consider the following factors:
- Assess the availability of extra funds before making any investments.
- Understand your ‘why’, that is the goal for your investing.
- Understand the investment landscape of your environment and get basic financial literacy.
- Leveraging financial literacy and investment platforms, such as “PaceUpInvest.com,” to facilitate initial steps and secure the right position is essential.
Portfolio Diversification
When engaging in investments, it is essential to comprehend the dynamics of risks and returns across diverse asset classes, encompassing fixed income, equity, commodities, startups, and real estate investments.
- Dividing your portfolio among various asset classes is crucial.
- It also important to consider the concept of liquidity, drawing a clear distinction between the ease of liquidation in the stock market compared to the long-term commitment required in business investments.
- Managing risk across different asset classes is necessary.
- Considering the duration of the investment is also important.
- Financial planning and situation analysis before starting
For novice investors, it is recommended to initiate with Exchange Traded Funds (ETFs) that provide exposure to global assets, serving as a stepping stone for beginners. Consistent engagement in this approach allows for the benefits of compounding.
Living your Best Life
True wealth is having whatever you consider as wealth at your disposal. Here are some key concepts to consider:
- Compounding Interest
- Early Investing
- Recurring Investments
- You have the autonomy to shape the outlook of your investments.
- Learn strategies to Increase your income and reduce your cost.
- Have an emergency fund.
- Practice diversification by distributing your investments across various asset classes such as stocks, bonds, and real estate.
- Opt for strategic asset location to mitigate risk.
Steps
Financial Overview
Gain insights into where your income is allocated, distinguishing between Fixed Costs and Variable Costs.
Emergency Funds
Save for unforeseen circumstances not covered by insurance.
Allocate
Allocate a certain percentage of your funds towards investments
Types of Investment
Stock Markets
High Risk: Day Trading, Stock Picking, Mutual Funds , Cryptocurrency.
Medium Risk: Index Funds, ETF’s (Exchange Traded Funds) covers diverse areas likww stocks, bonds, real estate etc.
Low Risk: Bonds.
Real Estate
Consider options such as buying to live, buying to rent, or buying to flip. Always ensure you analyze the numbers, as the house you live in may not always be an investment. Additionally, explore REITs (Real Estate Investment Trusts) for a more liquid option.
Cryptocurrency
This is high risk , Ideally this should consists of less than 10% of total investment portfolio.
Money Lending
Medium Risk: Utilize lending apps.
Pension Fund Investment
Business/Side Hustle
- Use your talent to make extra income
- Enjoy tax benefits from a tax-free business in the first 3-5 years.
- Look for busineses that don’t require your physical presence
- Consider buying old or struggling businesses and revamping them.
Startup/VC Funding
- Focus on tech startups.
- Explore funding options.
- Consider affiliate marketing opportunities.
Conclusion
When investing, it is important to set investment goals, reflect on your financial habits, embrace diversification, and adopt a patient and strategic approach to investment. Building an investment portfolio often begins by taking the first steps.
