Now, having reviewed the multitude of investment opportunities, both in traditional and alternative investments, you should have a grasp of what each investment avenue can provide and where you potentially fit in.
Odds are, as this is a beginner’s guide, then you will be starting your journey into investing. If, however, you are reading this section of this e-book, then you have started your journey in the right way. Getting information and a basic understanding of the different types of investments - both alternative and traditional – is paramount before you start anything.
Once you have finished this book, sign up and attend a few seminars, take a workshop or two, even log in and start trading on a simulator – such as the ASX Game – which allows you to trade in live conditions, but with money that is not your own. Therefore you limit any losses entirely, but unfortunately, you don’t make any gains.
So, now to the million-dollar question, what type of investor are you? The key is to understand first what your objectives are? Are you looking for the thrill of trade, buying and selling quickly and taking risks, or are you looking to invest for the long term, maybe to support or fund your retirement?
Like you would a business plan, firstly, set yourself a series of key goals or objectives. These can include setting up a residual income stream in 5-10 years or turning $10,000 into $100,000 in ten years. Ensure you are being SMART or, Specific, Measurable, Achievable, Relevant and Timely.
For example, by 2025, I want to have a diversified portfolio of shares with a value of $60,000. So, even if you have to put in $12,000 per year, or $1,000 per month into your portfolio and you make no capital gains through the shares, this is achievable.
Once you have 5+ objectives in place, now it is time to understand your risk tolerance. Can you afford to lose everything you are putting in? If the answer is no, then shares, cash and property through the ‘traditional’ investment channels are right for you. Potentially being part of a managed fund, even investing in some art could be of benefit.
On the other hand, if you have come into some money – through inheritance or otherwise – maybe you own your own home, and you are looking to invest money and make a higher return – with little to no consequence to your livelihood or the roof over your head, then potentially looking at investing in a fund, ETFs or even CFDs could be an option.
We will always put a warning in place, that these alternative investment channels are used by experts, as when people with a little knowledge play in this space, they are often taken advantage of and can lose a lot more than you thought you were investing – as mentioned above.
So, the key is to get advice, seek experts to guide you. For example, many MDAs – such as the MDAs at Walker Capital – provide minimum investments of $10,000, and their returns – which you can see for yourself on our website – often buck the trends in the marketplace. It must be noted that the investment strategy used by Walker Capital as part of the MDA includes investing in highly risky and speculative products.
While investing is often seen as a long term strategy to future wealth and sustaining your lifestyle, there is no question that when you put your own money in, you become very interested in reading about company information, market movements and looking for the next play for your portfolio. Stay informed, read the financial papers, websites and blogs from ‘real’ authority figures – and NEVER invest more than you can afford to lose.
So, you could be a risk-averse investor, putting your money only into ‘blue-chip stocks’ such as BHP and the banks, while ensuring that you have your mortgage paid and your kids school fees paid. On the other side of the coin, you may have a high-risk tolerance, happy to risk $1,000, $10,000, $100,000 even $1,000,000 if the payoff is worth it.
The key is to set your objectives, set your limits, get expert advice and stick to your line – the moment you start deviating, getting carried away or ‘straying from your strategy’ this is where mistakes can be made and losses incurred.