Investment 101 – Protecting Your Assets

Assets

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As humans, we will always want more money in our pockets. The reasons are not always for greed and personal gain, but still the desire to make as much as possible is strong. That’s one of the reasons people turn to investments.

Investments, like shares, property and gold are great ways to enhance our personal finance. One day you are struggling to pay the bills, and the next you are multi-millionaire. Why wouldn’t you make investments where possible?

However, the hard work doesn’t end there because you have to protect your assets. That is rule number one in the investment handbook, and here are a few tips that will come in handy. The last thing you want is to make a fortune only for it to be cruelly snatched from your hands.

Insure Your Portfolio

Insurance in the investment sector does not have the same meaning as you might think. Life insurance, for example, protects your family should there be a loss in the family. The family receives a payment based on the irrevocable loss. However, investments are different because they can rebuild after a loss. So, your ‘insurance’ doesn’t cover your loses completely but minimise the downside of any risk. Options are best used with regards to restrictions. If there are short-term restrictions on the market, options can be used to cover any short-term risk.

Return Of Capital

Return of capital is where the shareholder, you, is rewarded principal payments that exceed the growth of a business or investment. Simply put, a return of capital offers a short-term solution to any risk involved with your investment. They are safe havens, which is why a lot of investors run to them with open arms.

Don’t Invest Fully

The temptation is to put everything you have into your investment. After all, you are trying to make as big a return on the asset as possible. But, being fully invested is dangerous because you have all your eggs in one basket. If that basket falls to the ground and crashes, everything you have crashes and burns, too. There are times when it is best not to invest fully, so you can mix and match your approach as and when you like. That way, you minimise the risk should the worse happen. Mutual accounts are a great way to do this because they have no mandate to be invested all the time.

Sell Even If There Is Nothing To Buy

Don’t get stuck with this way of thinking. Just because there isn’t a decent investment on the market doesn’t mean you shouldn’t sell. When the investment hits your target price, sell and accrue your cash. Then, you can bide your time until the next investment or put it into a high-interest account.

Store It Safely

There are some investments that you can physical store, so they are more secure. Take gold as an example. Gold storage comes in many different forms, from a gold IRA to burying it in the garden. Normal IRAs also act as a secure place to store paper assets and investments.

Be smart because that is the only way you can be safe.