:: The Beginner's Guide to Managing Money ::

Suitability of Investments

Before investing, ask yourself when you might need the money in your investment and what sort of risk you feel comfortable taking.

If you can't afford to lose any of your investment or if you have a low risk tolerance, you'll need to invest conservatively.

If you will need your money in the near future, you will want to invest in more liquid assets, which can be converted to cash easily.



	Suitability of Investments Before investing, consider your: Financial situation Goals & objectives Risk tolerance Financial Situation If you can't afford to lose any of your investment, you'll need to invest conservatively. If you do not need to live off your savings, you can invest more aggressively. Goals & Objectives An investment's liquidity is important, especially if you will need to cash in your investments within a few years. A liquid asset can be converted to cash quickly. Stock shares you own in a publicly-traded company are liquid, because they can be sold easily. Even when your investment is liquid, however, there is no guarantee you'll break even or make money. On the other hand, a house you buy is not a liquid investment, because it can take months or even longer to sell. Risk Tolerance Your risk tolerance is your ability to deal with risk. If you would not be comfortable with investments that fluctuate up and down in value, then you have a low risk tolerance and should invest conservatively.