Finance Course Online

Your Investment Guide

Each individual is unique, with unique needs and aspirations. And that one person's path to prosperity may not necessarily be the right one for all to take.

There are many ways to achieve good fortune. Simply choose the one that's right for you. Continue below.

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A FEW FUNDAMENTAL CONCEPTS:

There are some fundamental concepts that can serve as helpful guidelines for investors. A few of them are outlined below:

• DIVERSIFICATION – The investor can diversify to ensure that his money is distributed among several different investments or instruments in order to spread out his risk. The more diversified a portfolio is, the less vulnerable one will be to the poor performance of a single investment.

• RISK AND RETURN – Risk can be defined as the uncertainty of the outcome of one's investment. When a customer invests, the price value of his investment may rise or fall. These price fluctuations introduce the risk that the investor may get into. Typically, the higher the potential return on an investment, the more it tends to rise and fall in value and the less predictable is the return. It is important for an investor to match his risk appetite with his chosen investment. That is, an investor whose risk appetite is low will not have an investment that is subject to great price swings.

• LONG-TERM INVESTING vs SHORT-TERM INVESTING – The period for short-term investing generally covers less than one year; medium term investing is greater than one year but less than three years; while that of long term investing goes three years and beyond. Time allows markets to work in the investor's favor. Holding an investment over a long period of time reduces the level of uncertainty.

The next page will show you how to build your investment portfolio.

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