How to take the fear out of investing

In short, volatility (and risk) is higher for shorter periods. Therefore, one way to significantly risk your investments is to have a long -term time horizon. Think for years, not for years.

What are you allocating assets?

The allocation of assets is the division of your investments into different classes of assets – how much of your portfolio is in defense assets (such as bonds) in growth assets (shares, property, etc.).

There are researches that argue that asset allocation is one of the most important factors in portfolio design – even more important than a certain investment choice.

Good investment is not about betting the only horse that will enrich you. This is about designing a general portfolio and strategy that will achieve your long -term financial goals as a whole. Another way to think about this is that eating a healthy diet is not about a certain food, but in general the balance of what you eat.

Having a good balance of defense and growth assets helps to balance the risk profile of different asset classes, so you will not be exposed to the risk of a single class of being.

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What should this balance be? Typically, no matter how young you are, you may afford to gain a heavier weight for growth (risky) assets, because you have time to drive any market collapse, whereas you want to start bringing more defense assets to your portfoli to protect your assets against a significant decline while making your retirement.

What are your financial buffer?

If it does not have a long enough time, it is a great reason for people to lose money in investments, and the other does not have enough financial bumpers (and the two are associated).

If you want to invest your money through the ups and downs of the market, you must have enough money to see you with short and midterm exam costs.

What will you do if you throw everything into investments and do not have enough savings, if you lose your job, enter an accident or have an unexpected medical emergency? Probably you will have to sell your investments to pay these things, and if you need to sell your investments early, timing may not be ideal.

Having financial bumpers that will see you in emergencies reduces the risk of being in a position to sell your investments at a bad time in the market.

You can’t escape the risk. Everywhere. There are risks to choose not to invest. There are risks to keep money in savings. Not really less risky. This is just different risk.

The only real way is to learn to define, reduce and manage risk. Then you are no longer afraid of the risk. You understand. There are strategies and systems to manage safely. Escape is no longer a threat. In fact, after learning how to use it, you see that there is a tool to create a reserve.

Paridhi Jain, TalentedIt helps adults to learn to manage, save and invest through financial training courses and classes.

• The recommendations given in this article are general in nature and do not aim to influence readers’ decisions on investment or financial products. They should always seek their own professional advice, taking into account their personal conditions before making financial decisions.

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