First principles of investing

1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20   

1. Five steps to establish your investment goals

One way your investment goals may be established is by assessing how much of the capital you plan to invest is tied to specific future spending, and how much of it is genuinely spare. You may do this by completing the following steps:

• Step 1

  Prepare a personal profit and loss account by setting out your income and expenditure, together with your current investments and liabilities.

• Step 2

  Your basic investment goals should include emergency funds, repayment of your mortgage, your pension, and any other priorities, for example school fees.

• Step 3

  Your goals - whether to generate income, capital growth, or a combination of the two - will dictate the proportion of capital you should invest in each asset class (for example, equities, bonds, gilts and deposits).

• Step 4

  Once you have considered your asset allocation, look at the range of direct investments, mutual funds and savings products which may help you achieve your aims.

• Step 5

  Consider how tax planning and tax efficient investment can help improve your returns and reduce your tax bill - but never invest purely for the sake of obtaining tax relief.

1. Five steps to establish your investment goals 2. Your attitude to risk and reward 3. The major asset classes 4. Which type of manager? 5. Your investment assessment kit 6. Is past performance a guide to the future? 7. Easy access deposits for emergencies 8. Fixed income products 9. A rising income 10. The choice of collective equity funds 11. Pensions and ISAs 12. Tax efficient but may be very risky 13. Selecting your shares 14. Your stockbroker 15. Buying your shares 16. Ethical Investment 17. When to sell 18. How to keep your portfolio on track 19. Do you need an adviser? 20. Conclusion

• First Steps in Shares
• How to Read the Financial Pages