The basics of investing
by Wealth Know How in DIY Investing
James Dunn explains the fundamentals of investing in this video and talks about approaches in making your money grow without taking unnecessary risks. Just how much risk you can tolerate and your desired timeframe will more often than not determine the type of investment that is right for you. Choose well and don’t be shy about asking questions and seeking advice.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 25 Jul 14
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Venezuela tension heats up
Duration 03:16
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Duration 03:10
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Markets climb as investors watch US healt...
Duration 02:31
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James Dunn explains the fundamentals of investing in this video and talks about approaches in making your money grow without taking unnecessary risks. Just how much risk you can tolerate and your desired timeframe will more often than not determine the type of investment that is right for you. Choose well and don’t be shy about asking questions and seeking advice.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
Trouble is, cash probably won’t earn enough for you to retire on.
The paradox of investment is that to earn higher returns than cash, and create wealth at a faster pace, you must accept some higher investment risk.
All investments carry risk. Your objective is to make your money grow without taking unnecessary risks.
Whether you are an experienced investor or a beginner, there are several steps you can take to grow your money while taking risk that you are comfortable with.
A smart investor takes time to understand the basic principles of investing, then develops an investment plan, and then sticks to their plan in a disciplined manner.
The first step is to understand the amount of risk you ‘re prepared to take. Risk relates to how much capital you are prepared to lose. Are you comfortable with the risk of losing part of your capital, but having the possibility of high returns? If the answer to this is yes then shares might be the answer. Or do you not want to lose your capital at any time? If so, you’ll need to be in safe investments – understanding that they come with low growth potential.
You also need to think about your goal, and the timeframe of your investment – are you investing to save for a house deposit, or for a child’s education? Short-term goals, like saving for a house deposit – where no capital loss can be tolerated – may require investing only in cash.
Longer-term goals like saving for a child’s education may have a timeframe of over 10 years, which should allow time for any capital loss to be recouped: therefore more risky assets like shares could be tolerated.
The investments you choose will depend on your tolerance for risk, and the timeframe. Cash is the lowest-risk asset and bonds are also fairly conservative assets. Next there is property, which can be low-risk over the long term, and shares – Australian and International – which are a volatile asset in the short term, but have a very good track record of generating long-term wealth.
Whatever you do, you can’t just invest and forget. Things change regularly, so review your investments, and plan, regularly. And as always, don’t be shy about asking questions, doing research and seeking professional advice.