Saturday, 30 January 2010

Three most important personal factors to consider: Your Time Horizon, Risk Tolerance and Investment Objectives

How well do you know yourself

In understanding your relationship with money, what are the 3 most important personal factors to consider?

These are:
  1. how long or short a time you have to invest
  2. how much risk you can tolerate, and,
  3. your investment objectives and whether they fit in with your time horizon and risk appetite.
Cash flow is another important factor to keep in mind when you assess your personal situation.  You need to have a good idea of your cash inflows and outflows and of how to do a balancing act between the two.  That is why a cash-flow needs analysis is such an important part of any financial advice programme.

By knowing more about yourself and where you want to be, you can now use this knowledge to construct an investment portfolio that fits your unique needs: 
  • your time horizon,
  • your risk tolerance and
  • investment objectives. 
In short, you have created an investment portfolio tailor-made, so that your money can work for you.

Understand what money means to you:  Answer 10 simple questions

Asset Allocation:  The Best Way to Minimize Risk of Your Portfolio

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