6 Financial Tips to Follow in 2021

Up until a few years ago, the financial markets were a concern for few. Most people had had their jobs for life, and it made more sense for them to invest in brick and mortar to build wealth. Governments would provide generous pensions, and generations would live in the same house for years. 

However, today’s world is vastly different from the one we just described. Present financial markets play a pivotal part in every economy, and almost all products are commoditized and can be traded. Financial investments have become a necessity for people who want to grow their money and live an easy retirement. But, what’s the right way to start?

Going out to look for a bargain without proper research or risk assessment before investing can hamper your chance of returns. So, we have highlighted a few lessons that will help you invest better and make profits in the long run.

1. Set Your Financial Goals

When starting your investment journey, make sure you have a clear idea of your financial goals and risk tolerance. You could accomplish this through research, but if you are short on time, get in touch with a financial advisor. While there are no guarantees in the market, with professional help, you can expect to reach your goals because of a structured investment plan. 

Remember, all investments come with some degree of risk. Unlike bank deposits, financial market investments are not insured up to a particular limit.  There will always be the chance of losing out on your principal amount – even if you have bought your investment plans from the bank.

The reason why it is advisable to invest in the market is simply that it offers great returns. For those with long-term goals, taking higher levels of risk with shares and bonds make more sense than those with shorter-term goals, for whom bank deposits may be the best option. 

2. Diversify Your Investments

In the history of the market, stocks, cash, and bonds have not moved up simultaneously. An organic market that allows one category of assets to shoot up might bring another type down due to specific conditions. Therefore, professional advisors always recommend that you invest your savings in various assets so that your portfolio is balanced and hedged for all risks. 

Also, it is important to remember to save for an emergency fund. This fund is essential in case of financial or medical emergencies and will allow you to stay in the market without liquidating all assets during a weak point. A good rule of thumb is to save around six months of expenses in your emergency fund. 

3. Get Rid of High-interest Debts

The safest investment strategy is to pay off all your debts that have high-interest rates. To start your investment journey on a new page, make sure you clear out your balance sheet as much as possible, mainly if it costs you a lot in interest. 

You can opt for debt consolidation services if you have many such debts. Consulting with an advisor who can give you financial tips regarding your debt payoff strategy can speed things up drastically. Remember, high-interest rates will keep on denting your original investment returns. Only when you have them cleared will you be able to see your money grow! 

4. Use Your Employer’s Contribution To Your Benefit

In many firms, employers match a part or all of the contribution of their employees into their retirement funds. So, if you are someone who does not make maximum deductions from your pay for your retirement, you are losing out on free money from your employer. 

Discipline yourself to contribute as much as possible to your retirement savings from an early age to grow your savings. 

5. Stay Alert of Fraudsters

Financial fraud is nothing new. However, today’s hyper-digitization has paved the various new ways to commit these crimes. As an investor, you have to be careful in these matters. Follow all necessary guidelines issued by your country’s central bank to avoid falling into these traps. Also, discuss the various kinds of financial attacks investors are vulnerable to with your professional advisor.

One of the common ways fraudsters lure investors into scams is by using legitimate financial news to give more credibility to their schemes. Ensure you know well about every system you invest in before you commit your money. Always consult with your trusted team, friends, or family members on the matter. 

6. Rebalance Your Portfolio Every Six Months

In rebalancing, you cut off your wins from gaining investments and use the profits to buy assets that are underperforming in the market. While this might sound like poor advice, it is far from it. 

With periodic rebalancing, you discipline yourself to sell when at a high and buy when at a low. Remember, you cannot time the market, so make sure you time your entries and exits right! 

Also, do not forget to average your investments. This means investing in installments over a long period. According to financial experts, this strategy allows you to bring down average costs of assets and grow your money in the long run rather than banking on a lump sum amount to make you a fortune. 

Follow these six financial tips in 2021, and we believe that your portfolio will have a much better chance of making you money. Yet, if you are unsure, or are looking for a well-mapped plan that helps you tick all your goals, then Book a free consultation on My Financial Advisor today and learn what investments are most likely to work for you!