Making an investment allows you to achieve your projects more easily. However, you should not opt for just any investment. Certain criteria must be considered. Otherwise, you could lose your investment.
Discover in this article how to properly choose your investment to minimize the risk of loss.
Is the investment easily accessible?
Before making an investment, you must first have the means to do so. Do not turn to investments that are financially inaccessible to you. It is preferable not to go into debt to make a financial investment. Otherwise, you will have monthly payments to make for a number of years.
Regardless of your financial situation, you should make your choice among the best investments available today. Beyond financial capacity, the accessibility of an investment is measured by the financial knowledge needed before committing.
These are the skills that will allow you to better understand how it works for better management.
If you are interested in stock market shares, for example, you will need certain skills before committing. If you do not have them, you can always call on a financial advisor who is knowledgeable in that field. On the other hand, opening a savings account (like a livret A) does not require as much, and with 10 euros, you can already open your account.
The duration of the investment
You make an investment today to fund a project. It is therefore important to consider the date by which you will need your funds to guide you to a specific financial product. Depending on the case, you will opt for a short-term or a long-term investment.
The issue of duration is addressed because for some investments, you will not be able to access your funds before maturity. For others, you will have to pay a significant amount before making withdrawals.
To avoid these penalties, ask yourself if you will be able to recoup your funds at any time before committing. Also, consider your projects. For example, you will not choose the same financial product as someone planning to acquire a home in 15 years if you want to make an investment to enhance your retirement life in 35 years.
Entry and exit fees
Choosing the right investment also means considering entry and exit fees. For this criterion, you must base your decision on the procedures and amount you must pay during the subscription. The fees vary from one type of investment to another. Note that you have the possibility of negotiating these entry fees.
As for exit or closure fees, you also need to pay attention when making your choice. Indeed, there are products for which you are not allowed to make any withdrawals. If you do so, it is highly likely your savings product will be closed. Therefore, make sure to learn about these different fees before committing.
Is the investment safe?
Before choosing your financial investment, you need to consider the associated risks. This means questioning the security of the investment. You need to know if the return is fully guaranteed or if there can be losses.
Additionally, it is important to know if you can recover the initial amount you invested before committing. It should be noted that for some investments, rates can drop to sometimes even negative levels. In such cases, it is possible that you could lose your investment.
If you do not want to take such a risk due to your financial situation, simply opt for investments where your capital is guaranteed. If you have the means, you can diversify your investments. Do not put all your eggs in one basket. This way, you can compensate for any losses you may incur with other more fruitful investments.
Profitability
Profitability is also an essential criterion to consider when you want to invest your money. Now that you have ensured the security of the investment, you need to consider what it will yield for you.
The return you achieve here can come from the interest you receive regularly. It can also originate from the profit when selling the financial product.
To ascertain the yield here, you must include in your calculations the fees and taxes required during subscription, throughout the investment period, and at exit. By considering this, you will know precisely the rates you can aim for to choose the right investment.
