Home Finance Creating your own financial plan

Creating your own financial plan

by wrich

Have you decided that it’s time to start investing? If you are not an expert and you are approaching this world for the first time, take your time to do some research. Acquiring the proper knowledge can be game changer and remember that preparation is key. Starting directly buying some stocks of famous company is not the right choice, since there is a lot to learn before. There are few things you should ask yourself: do you want to invest short-term, middle-term or long-term? How much risk are you willing to face? Do you want to do this alone or followed by a professional? The answers to these questions are going to be part of your investments plan.  All these steps are recommended if you want to follow a rational path. It is going to help you to try secure your money and, consequently, your financial future. 

Screen the market and invest in what you believe in

Investments should reflect your values. It is definitely something you want to take into consideration before allocating your money. Find companies you share ethics with. You sure don’t want to invest in a market you don’t know or that it’s far away from what you believe in. For example, you can read more here: https://www.moneyfarm.com/uk/socially-responsible-investing/. Do you care about the environment? Better avoid firms that do not have a plan to reduce their CO2 emissions. Start with a specific market, maybe among the ones that seem promising for the future, and then screen the companies available. You can read about their core values, their future plans, but also information about revenues, growth, etc. 

Analyse your financial situation

A fundamental step towards the investment is a proper analysis of your financial situation. Even if you have already established the amount of money you will allocate in assets, it is advisable to have a clear view of your total expenses and income. Having a clear picture will help you make wiser decisions. Once you have done it, make sure to have an emergency fund. This sum won’t be invested and it needs to be always available for you, for any kind of problem you may issue in the future. Money invested can’t always be withdrawn at any moment. 

Build a diversified portfolio

A golden rule for when it comes to investing the money you have saved, it’s having a diversified portfolio. Picking different asset classes can really benefit you. Choose sectors that have no correlation with each other. In case one is going down in value, the others can balance it, however the financial market volatility can’t guarantee a sure income even if you have a good financial plan and portfolio. When checking the markets consider also the options available in the other countries. Your portfolio will be even more diversified and solid. If stocks of a specific country are performing badly, the other investments will counteract mitigating your loss. 

Do it with professionals

If you are at a beginner level, you will need time to study and be prepared. Even though you take some time to read, professionals will always know more than you. Financial advisors also have experience and they can really help you to invest in a safe and wise way. An official educational path in this field can really contribute to invest strategically and build a solid plan and portfolio. A professional can follow you at every step, you can work together to customize a proper investment plan and to pick the right assets based on your profile and values. 

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