{"id":420,"date":"2020-04-22T12:53:09","date_gmt":"2020-04-22T12:53:09","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=420"},"modified":"2020-04-23T07:22:22","modified_gmt":"2020-04-23T07:22:22","slug":"factors-to-be-considered-before-making-an-investment-decision","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/factors-to-be-considered-before-making-an-investment-decision\/","title":{"rendered":"Factors to be considered before making an Investment Decision"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>To achieve your long-term\nfinancial goals, it becomes necessary to place your money in places where it\ncan potentially earn more. A saving account is a good place to keep your money\nbut only if you have short-term goals otherwise, if you have retirement plans\nor goal to send your children to college then you would need to invest.\nInvesting can help your money to grow faster. Although it carries some\npotential risks the rewards are worth to take that risk. There are many\nasset-classes out in the market for investments and one investment avenue that\ncan allow you to accumulate wealth faster than any other avenue is stock\ninvesting. However, amongst other investment avenues, it is also risky and herein\nreturns are based entirely on market performance. But, if done right, it can\ngenerate you an income that won\u2019t only cope with the inflation but also provide\nyou with the wealth that helps you achieve your financial goals. <\/p>\n\n\n\n<p>As we mentioned above that stock investing is quite risky especially if you are an entry-level investor, certain factors are to be considered while making an investment decision, to avoid the common pitfalls. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#What_are_the_factors_to_be_considered_before_making_an_investment_decision\" title=\"What are the factors to be considered before\nmaking an investment decision?\">What are the factors to be considered before\nmaking an investment decision?<\/a><ul><li><a href=\"#Factor_1_Lay_your_Financial_Roadmap\" title=\"Factor #1: Lay your Financial Roadmap\">Factor #1: Lay your Financial Roadmap<\/a><\/li><li><a href=\"#Factor_2_Check_your_Risk_Tolerance\" title=\"Factor #2: Check your Risk Tolerance\">Factor #2: Check your Risk Tolerance<\/a><\/li><li><a href=\"#Factor_3_Consider_Asset_Allocation\" title=\"Factor #3 Consider Asset Allocation\">Factor #3 Consider Asset Allocation<\/a><\/li><li><a href=\"#Factor_4_Do_not_Fall_for_Volatility\" title=\"Factor #4 Do not Fall for Volatility\">Factor #4 Do not Fall for Volatility<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">What are the factors to be considered before\nmaking an investment decision?<\/h2>\n\n\n\n<p>Given the recent market events,\nyou may be wondering whether you should be making any move in the current\ndownturn or not. While we can\u2019t tell you what you should do during this\nvolatile market but there are certain factors like we said before that you must\nconsider before making any investment decision. Consider these areas to make an\ninformed decision:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Factor #1: Lay your Financial Roadmap<\/h3>\n\n\n\n<p>Whether experienced or\nentry-level \u2013 every investor must start from laying a financial roadmap before\nmaking an investment decision. The first step in making a successful investment\nis to understand your goals and objectives to ensure that you are on the right\ntrack. You need to know whether you\u2019re not making any mistake in investing.\nMaybe isn\u2019t it the right time to invest with all the past debt and outstanding\ncredit card bills. You need to know that the money you will put into this\ninvestment is for long-term and you won\u2019t be able to withdraw it soon. More importantly,\nthere is no guarantee that you will make money through your investment. <\/p>\n\n\n\n<p>Thus, lay your financial roadmap to\nevaluate your assets &amp; liabilities priorities, overall incomes and ensure\nthat your next investment won\u2019t affect your expenditures, insurances, and funds\nyou kept safe for short-term emergencies. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Factor #2: Check your Risk Tolerance<\/h3>\n\n\n\n<p>Every person has different\nappetite whether it is of his temperament, risk-bearing, or eating. Not\neveryone is comfortable taking high risks for extras. Therefore, it is\nrecommendable for any investor to check for his\/her risk appetite to ensure\nthat the investment made in stocks align with the investor\u2019s financial goals.\nWhile you\u2019re at it, it is important to not make buying decisions in haste and\nunderstand the degree of risk in investing in particular security you wish to\nplace your money into. <\/p>\n\n\n\n<p>When you make your investment within your risk tolerance, there is a higher possibility that you fulfil your financial goals. For instance, if you have a risk appetite then you can create huge corpus in investing in small-cap and mid-cap stocks with a long-term horizon. However, if you have a low risk-appetite then you can make benefit from <a href=\"https:\/\/www.invest19.com\/blog\/how-safe-is-it-to-invest-in-blue-chip-stocks\/\"><strong>investing in blue-chip stocks<\/strong>.<\/a> <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Factor #3 Consider Asset Allocation<\/h3>\n\n\n\n<p>Always remember, <strong><em>\u201cNever\nput all your eggs in a single basket.\u201d<\/em><\/strong> &nbsp;&#8211; To ensure potential returns, it is important\nto manage risks and avoid putting all your money in one or two company\u2019s stock.\nInstead, spread your investments across multiple sectors or asset-classes to\nminimize the risks of bearing significant losses. For example, let\u2019s suppose\nyou are invested in the stock of some XYZ company from Auto Sector which\nsuddenly falls in value due to poor quarterly results or rises in crude prices\nwhich affected the whole auto sector, impacting the sale of XYZ Company. <\/p>\n\n\n\n<p>In such a situation, you would incur\nsignificant losses that would take a few more years to months to re-generate the\nsame returns. But, there is also the possibility that you may not receive the\nreturns on that investment. If that happens, all your financial planning will\nbe failed and you still far away from your financial goals which you were\nhoping to accomplish from creating corpus from that investment. <\/p>\n\n\n\n<p>But, if you allocate you\nstrategize your investments to balance your risks and rewards by investing in\ndifferent sectors or asset-classes as per your time-horizon, risk-appetite, and\ninvestment objectives, you can save yourself from the trouble of starting from\nscratch and compensate one loss with profits from another. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Factor #4 Do not Fall for Volatility<\/h3>\n\n\n\n<p>The stock market is so volatile that\nan investor can be in profit and loss, both in a single day. This type of\nfluctuation in the market triggers investors to make decisions in haste.\nHowever, you shouldn\u2019t have to be like those investors. If you had decided to\ninvest in financial security then you should trust your research and stick to\nit. During your investment journey, you may see many ups and downs but you don\u2019t\nhave to be influenced by it. Remember, the reason you made that investment decision\nis to accomplish a certain goal that you would require you to stick to your\nplans no matter you are in profit or loss. <\/p>\n\n\n\n<p><em>All your efforts will be in vain if you panic selling or lose hope of\nmaking profits with your investments!<\/em><\/p>\n\n\n<p><iframe src=\"https:\/\/www.youtube.com\/embed\/S_QuRSscms0\" width=\"100%\" style=\"min-height:400px;\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p><div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 25,428<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"420\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">5    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>To achieve your long-term financial goals, it becomes necessary to place your money in places where it can potentially earn more. A saving account is [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/factors-to-be-considered-before-making-an-investment-decision\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":422,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7],"tags":[17,102,103],"class_list":["post-420","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","category-investment","tag-stock-investing","tag-investment-decisions","tag-factors-to-consider-before-investing"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=420"}],"version-history":[{"count":4,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/420\/revisions"}],"predecessor-version":[{"id":426,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/420\/revisions\/426"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/422"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}