How to pick an investment

Photo Credit: David Berkowitz

How to pick an investment

If you are interested in doing some investment I strongly recommend some advice given to me long time ago.

Save at least 10% of your income

Make sure you save 10% of whatever you earn for later use. This is the most hard part, but is the most necessary, never think you are going to make an investment only with a loan, you should have available money to invest first.

Remember you can invest not only for a money return. Travel, study, health, for example are valid investments.

Wait at least a year of savings before investing

If your investment is too low, you will not be seeing a good return for the time and effort invested. You must feel this is not an small amount so you can keep the interest and motivation, otherwise there is a high probability you will lose that money.

A year of savings must represent at least one month of your income, so it is a good starting point for investing.

Invest in things you know

Puting money into something is not going to be the answer, you must know what you are doing with your investment. Just remember how hard it was to get that money in first place.

Each investment you make needs time

Because you put money into something does not mean it will going to work. Even if you put all of your time on it, there is a chance of losing your investment, but if you make sure to have time to take care of your investment, the chances of being sucessful are going to be higher.

Make some fixed time to check on your investment

Set an specific time and date to check on your investment on a regular basis, it will change how often you need to do it depending on the investment, but make sure to keep an eye on it all the time.

Set clear expectations

Just before closing the deal on the investment, make sure to have a clear goal on it, answer yourself these questions:

  • How much I expect to make?
  • When I expect to get my profit and my investment back?
  • What do I need to do to turn my investment into cash?

Always remember to have this into account when it comes to check an investment opportunity, there is nothing guaranteed, but you will have a higher success rate if you follow this advice.