Choosing investments for your investment portfolio is not easy. It goes without saying that you want the ‘best’ investments, however, you want to make sure that the investments you choose are appropriate for your circumstances and your goals.
Firstly, you need to establish your short and long-term financial goals. You then need to work out your ‘risk profile’. Risk is related to return – generally, the higher the expected return, the higher the risk and conversely, the lower the expected return, the lower the risk.
Choose what’s right for you
While some people are comfortable with higher risk investments because they offer the opportunity for higher returns, others are more conservative and prefer less risky investments such as fixed interest. When selecting your investments, it’s important to understand that the level of return will differ.
Once you have established your risk profile – from conservative through balanced to growth – you can choose investments to suit your risk profile.
There are a number of different asset classes you can choose for your investment portfolio:
- Cash – low risk, low return
- Fixed interest – low to moderate risk, moderate return
- Property – moderate to high risk, moderate to high return
- Shares – high risk, high return
Spread your risks
Diversification is important when choosing investments because the positive returns you receive from one investment can generally offset any negative returns you may receive from other investments.
Financial advice makes a difference
Obviously there are a lot of issues to consider in choosing investments to suit your needs and goals, but advice from a professional can help you make the right decisions.
For more information regarding financial planning and how you could benefit from financial advise, please visit out Services page or book an appointment to chat with one of our financial advisers today.
Wright Evans Planning is an Authorised Representative of Lonsdale Financial Group Ltd ABN 76 006 637 225, AFSL No 246934. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial planner.