Three things to consider when choosing investments for your portfolio are:
- industry or sector,
- tolerance for risk, and
- rate of return.
In most instances, the information you collect researching these factors will provide answers to important questions, as well as help you make important investment decisions. Given the attention they deserve, these factors will influence your choices and give your investing strategy the direction it needs.
Industry or Sector
Based upon global and domestic economic performance, select an industry to invest in that has demonstrated prosperity and potential for future growth. For example, in times of conflict and war, defense and military-related corporations often enjoy a rise in profits. As well, the international container shipping industry – which is responsible for transporting more than ninety percent of the world’s goods – offers a number of opportunities to invest in too.
Tolerance For Risk
The amount of risk you can tolerate dictates and limits the investing options you have. Unless you are a seasoned, affluent investor, investments that are subject to market volatility, as well as financial and economic uncertainty should be avoided. Instead, focus your attention on investment that offer regular dividends or a residual income.
Rate of Return
Although everyone is in search of a “great” return, everyone’s definition of “great” is likely to be a little different. Sure for some it will be high rates of return, but for others it may be smaller, more consistent monthly returns. It is ok to be enthusiastic about investing, but do not let your decisions be influenced by greed.
Making choices about what type of investments to pursue is the first challenge you will face as a novice investor, particularly if you choose to not rely on an investment adviser or money manager. Carefully consider the factors outlined above for an introspective that reveals your best investing options when choosing investments.