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Step 4 – Know which investments are appropriate for you

          Before you select any investment product, it is important that you understand how it works. Each asset is unique and has a different risk-return profile which you can invest in to realise different financial goals.

          However, it is important to realize that negative return is possible for most investment types. The graph here shows the risk-return of various types of investments.

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Source: bankinginfo.com.my

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Step 3 - Know the concepts of investing

• Diversification

          To vary your investment. Diversification is a way of minimizing risks and protecting you from volatility in a particular asset class or industry.

          Different types of investments are exposed to different risk and by diversifying, the losses in some investments can be offset by other investment gains.

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Step 2 – Know the key issues to consider when investing

          As investments are long-term commitments, you must consider your ability to invest before you commit yourself. Among the key issues to consider are:

o How much money do you have for a medium to long-term commitment?

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          Investment is part of your overall financial planning. If you have some savings, you may want to invest them to maximise your return.

DIFFERENCE BETWEEN INVESTMENT AND SAVINGS
          Investment differs from savings. In savings, you will generally get back your savings, plus some interest. However, in an investment, you may or may not get back the sum invested or you may get much more than the initial amount invested. The potentially higher return is to compensate you for the higher risks undertaken by you.

PLANNING YOUR INVESTMENTS
          Smart investments are not a matter of luck, but a result of careful planning. When you invest, you should not rely on hearsay. You must spend some time understanding the market, either through research or seeking out expert advice. Below are some of the issues you should be aware: