The Ultimate Investing Checklist For All Investors

Investing is a powerful way to maximise your wealth potential. If you’re ready to get started, use this simple 4-step checklist to build your portfolio. 

1: Get the basics in order

Before you start investing, you need to make sure you have a strong financial foundation. This includes having a healthy emergency fund and minimal high-interest debt, like credit card debt. 

Credit cards typically charge around 25% interest per year on outstanding payments. Meanwhile, the S&P 500 index (an index of the 500 largest US-listed stocks) has returned an average of around 10% annually since its inception. In this case, investing instead of paying down your debt will still leave you with a net return of -15% a year. 

If you have high-interest debt, paying them off should be your top priority. Once you’ve pared down such debt, you can then start investing efficiently.

2: Evaluate your short and long term goals

To help you allocate your investment contributions, it helps to separate your goals into two broad categories: short term for events taking place within the next five years, and long term for events happening more than five years from now.

For short term goals such as a dream wedding in two years, you can opt to save it as cash in a high-yield savings account, or choose an investment portfolio that’s more conservatively allocated if you want the potential of higher returns. 

Since you will have less time to ride out any market downturns before you need to liquidate your portfolio at your intended goal date, a portfolio with a higher allocation to bonds will be more suitable for your needs. 

Conversely, if you are saving for your retirement in 20 years or more, a higher stock allocation will be better since you’ll be able to wait out any market volatility. Stock returns are typically positive as time horizons lengthen. In fact, over most 20-year time periods, the S&P 500 has posted positive returns for investors.

3: Find out how comfortable you are with risk

Your risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for greater potential returns. 

For instance, if you think you’re likely to panic-sell your investments when the market drops, you might have a lower risk tolerance. Allocating more funds to lower-risk assets like bonds will be more appropriate for you. 

But if you’re comfortable with the natural ups and downs of the stock market, and are willing to risk more money for the possibility of better returns, you can go with a higher stock allocation. Syfe’s 100% equity portfolio or 100% REIT portfolio are options you can consider.

Ultimately, all investments involve some form of risk. Your ideal portfolio is one that contains a mix of assets that can give you the highest probability of meeting your goals, and at a level of risk you are comfortable with. 

4: Decide what to invest in 

Your final step is choosing your investments. There are two things to take note of – diversification and fees.

First, you’ll want to make sure you’re broadly diversified by investing in different asset classes and different sectors of the market. Next, strive to minimise the fees you’re paying. This is because high fees eat into your investment returns. 

Syfe helps you invest in diversified, low-cost portfolios while keeping your fees as low as possible, starting from just 0.4% per year. Unlike DIY investing, you pay $0 in brokerage fees. There are also no sales charges or withdrawal fees, so you get to keep more money in your pocket.

The final word

As easy as investing with Syfe can be, you don’t have to go at it alone. Our wealth experts are always on hand to support you. They can help you determine the best ways to invest your money based on your goals and current finances. Schedule a complimentary call with them today. 

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