If you know of upcoming changes regarding your personal situation, such as relocation, job changes or changes in your family situation and others, consider if and how those may affect your financial situation. Take interest rates and compound interest into account. Know your personal risk profile and be comfortable with the risk of your potential investments - historically, the lower the risk, the lower the returns and vice versa. Investing is not free, so don’t forget to include fees you will be paying for setting up various accounts, stock depositories, trading and all kinds of transaction fees.Īlso keep in mind that capital gains (profits) from investments are subject to taxation - educate yourself on the tax laws of the country you reside in. When making your calculations, bear a number of factors in mind: Once you have formulated your SMART investment goal, the next step would be to educate yourself on the types of investments available to investors.įormulate different investment strategiesĪfter you have found out about the different types of investments available, you may want to assess which investment vehicles interest you the most and whether they are suitable for your SMART goal. In the scope of learning about these basics, you will also find out that investors diversify their assets, meaning that they combine different kinds of investments to reach their goals based on risks and rewards, as well as other factors. Once you have formulated your SMART investment goal, the next step would be to educate yourself on the types of investments available to investors by reading all the articles here in the Personal Finance section of the Bitpanda Academy - from the good old savings account all the way to corporate stock and fractional shares and then to bonds, mutual funds and ETFs. Now make your goal TIME-BASED: “I want to have EUR 60,000 by the year 2030 to make a down payment on an apartment in the city where I live by buying large-cap stock from Dreamhousedownpaymentmaker Corp so I can start a puppet-making business.” Now make your goal RELEVANT: “I want to have EUR 60,000 to make a down payment on an apartment in the city where I live by buying large-cap stock from Dreamhousedownpaymentmaker Corp so I can start a puppet-making business.” Now make your goal ACHIEVABLE: “I want to have EUR 60,000 to make a down payment on an apartment in the city where I live by buying large-cap stock from Dreamhousedownpaymentmaker Corp. Now make your goal MEASURABLE: “I want to have EUR 60,000 to make a down payment on an apartment in the city where I live.” Make your goal SPECIFIC: “I want to have enough money to make a down payment on an apartment in the city where I live.” Here are a few examples for formulating investment goals using the SMART criteria for goal formulation. Still, it helps to formulate one or two general investment goals. Do you want to invest to earn enough money to acquire a property? Or do you want to make certain you have enough money to feel secure when you are old? Or are you investing to ensure you can comfortably retire when you are older? The reasons for investing are as numerous as the investment vehicles available to those interested in investing. Have you thought about why you want to invest? Investors have different reasons to invest. Thanks to digital technology, investing is becoming increasingly accessible to more and more potential investors like yourself. Rest assured that those days are over - thanks to digital technology, investing is becoming increasingly accessible to more and more potential investors like yourself, and you don’t need to worry about not having enough funds to get started. You might have heard opinions from people around you that investing is only for the wealthy and that you are excluded from investing. Now that you have started managing your personal finances by setting up your household budget, your emergency fund and your savings plan, it is time to start budgeting part of your money towards investing.
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