Before you start making investments, be certain that you have the funds to do so. If you are behind on your monthly expenses, have high-interest debt, or meager savings set aside for emergencies, it is recommended that you prioritize those aspects of your life first. If investing makes financial sense, meaning you are using money you don’t need for at least the next five years, choose investments that reduce your chances of a worst-case scenario; which is, of course, losing all of your money.
If you’re not willing to accept the worst that can happen, don’t do it. – Muriel “Mickie” Siebert
Investing all of your money into a single stock is risky investment strategy because your money is dependent upon the performance of a single company. Investors can minimize stock market risks by diversify their portfolio holdings. This includes investing in a variety of companies in different industries or regions. As an alternative to equities, some investors believe U.S. Treasury bonds and investments in hard assets are among the safest investments.
Across the globe, the current investment environment is very uncertain. Investors are facing a range of risks that could have a significant impact on their wealth. Some of these risks are well known. These include the geopolitical concerns created by Brexit, the election of Donald Trump, higher interest rates in the United States, and climbing debt levels in China. As well, policy risk is a growing concern for investors. Are governments making the right decisions? Is there the political motivation to see policies through?
All things considered, in 2017, the biggest challenge for these organizations will be to balance growth objectives with short-term liquidity needs. Investors should expect that there will be challenging years during the course of their investment career. But, over the long term, a commitment to investing and a well-diversified strategy have consistently proven to be the most successful approach.