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7 Important Investing Tips You Need to Follow

7 Important Investing Tips You Need to Follow

The world of investment is a constantly changing entity, one that continues to evolve according to global economy shifts, political events, and social upheaval. This has been particularly true in recent times, as there have been a number of significant trend investment reversals within both developed and emerging markets.

Despite this changeable and unpredictable nature, however, there are a series of fundamental rules that all investors must abide by if they are to succeed. These are based on the philosophic principle of determinism, which dictates that investors must adhere to their philosophy at all times and understand the underlying laws that govern change.

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With this in mind, what are the key tips that investors should follow when looking to commit their capital in 2014? Consider the following:

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    1. Never invest more than you are prepared to lose

    As a starting point, you should never commit more than you are prepared to lose when investing capital. It is therefore important to fully appraise your financial circumstances before making a commitment, paying careful attention to: the chosen vehicle for investment, your disposable income levels, and any potential returns. Failing to adhere to this rule will create a debilitating cycle of debt and loss, and may eventually force you to take ill-advised risks in the quest to recoup your capital.

    2. Build a contingency fund

    On a similar note, the most experienced investors tend to operate within their financial means while also developing a viable contingency fund. This is a must for anyone with an appreciation of risk management, as this capital can be used to offset losses, balance your trading account, and provide security in the event of an economic downturn. A contingency fund can serve alternative purposes that suit your exact need, and generally afford you flexibility in the quest to maximize your profitability.

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    3. Develop your investment portfolio over time

    Another fundamental rule of successful investment revolves around timing, as you need to pace yourself and develop your portfolio over time. Whether you wish to deal predominantly in derivatives, such as currency, or if you want to invest in physical commodities, such as shares or property, you must start slowly and look to expand your portfolio in line with the return that it generates. Patience is the key to accessing long-term gains, especially in a volatile or unpredictable economic climate.

    4. Diversify your portfolio

    As your financial returns begin to grow, you should look to diversify your portfolio and invest in a wider range of market sectors. This not only helps to offset the potential risk posed by economic decline and sudden market shifts, but it also affords you the opportunity to maximize your earnings over a prolonged period of time. Diversification also brings great responsibility, however, as you must adopt a proactive approach towards managing your portfolio and changing it to suit prevailing economic trends.

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    5. Automate your investments and offset risk

    One of the ways through which you can streamline the diversification process is to automate your accounts, using online trading platforms and software to implement risk management measures. Online trading accounts feature a host of automated tools that have been designed to minimize your risk as an investor, including stop losses. You could even take this principle further by embracing the concept of automated trading, which uses predetermined algorithms to execute trades in real-time across a range of financial markets.

    6. Take advantage of tax-free growth and investment options

    From bank accounts to financial markets and derivatives, there are numerous investment options that remain free from capital gains tax. In terms of the former, you should consider investing your idle capital into cash ISAs. Any interest that you accumulate on these accounts is completely tax free in the current economy. With regards to the latter, there are also tax-free stocks and share ISAs, which are far higher risk but also capable of delivering inflated returns over time.

    7. Look to reinvest any interest that you generate from your income

    It is extremely difficult to maximize your financial returns without encountering risk, so it is important to strike a balance between being risk-averse and conscientious as an investor. One of the best ways of achieving this is by looking to reinvest any interest that you generate from the income that you have invested, whether it is withdrawn from a standard savings account or an online trading portfolio. This enables you to invest more into your portfolio without placing existing capital at risk, while it is also an excellent way of maximizing both your short and long-term returns.

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    Last Updated on March 29, 2021

    Life Insurance: A Secure Way To Protect Your Future.

    Life Insurance: A Secure Way To Protect Your Future.

    Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

    Importance of getting a life insurance

    No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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    On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

    Choosing the right insurance plan

    If you’re about to select an insurance plan, you should consider some important factors:

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    • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
    • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
    • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

    Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

    Differences between life insurance plans

    Here’s a short brief of some plan categories you can choose according to your needs:

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    • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
    • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
    • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
    • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
    • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

    Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

    So what are you waiting for? Plan for your future and live a happier and carefree life today.

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    Featured photo credit: aryehsampson.com via aryehsampson.com

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