Before entering the world of investing, it is important to honestly analyze your present situation. Doing so will allow you to effectively manage your own money in a way which maximizes returns while limiting unwanted risk. Questions to consider include:
What is my investment goal? How much time do I have to attain this goal?
Methods of saving for a down payment on a house differ greatly from saving for retirement. The reason for this lies in the factoring of time. Over short periods of
a few years, individual companies and the stock market as a whole can experience dramatic fluctuations which in no way represent longer-term trends. Because of this possibility, a smaller percentage of your portfolio should be allocated into stocks as the time for cashing in your investments draws near. Conversely, the longer the time period you have to invest, the more aggressive your portfolio should seek higher returns.
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