About protecting investment

Everyone would like to make money from investment as everyone is aware that we do rake in a fair bit of money from investment. But, then you start thinking ‘How do I protect my investment from making a loss?’ Protecting your money is natural and in these days of recession when we have seen a decline in the value of your investments, it is but fair to ask this question. Every investor would be interested about protecting investment made by him. But, do not let your fear stop you from making investments or long term retirement plans.

Long term investing is a very tricky business and it is a balancing act – balancing between minimum risk and optimum profits. The trick about protecting investment is to find and maintain that balance to have an asset-allotment plan which can take into consideration these factors. Asset-allocation or the pattern of distribution of your investments is important for managing your investment portfolios. Always have a mix-and-match of investments with some of your investments in short term, and the remaining in long-term. Do not keep all your eggs in one basket and that is the first lesson about safety of your investments. Invest some amount in stocks where you can expect growth; invest some amount in bonds which are bound to be stable and you can get a fixed income; and some cash in the bank to take care of any eventualities. The normal rule of the thumb is that you should keep at least six months of monthly expenses in a liquid account – it could be savings, Money markets, or Certificate of Deposits.

If your investment is safe and secure that would not be enough. Your principal would be intact, but what about growth, what about income, and what about your retirement plans. Factors of growth, security, and profits are essential when thinking about protecting investment. If you have invested in a house or commercial property, you have to protect it. Take care of all the statutory requirements and also ensure that the building users and tenants have a healthy environment to live in. Maintaining the building properly always increases the value of your building. Keep a regular maintenance program in place.

If you plan about protecting investment, the following tips should be of use to you:

Ø  Plan for setting aside 10% of your monthly income towards investments.

Ø  Keep a track of your investments and let not there be a knee-jerk reaction of taking out your money because of a sudden dip in the value. These are normal ups and downs. If there is a steady dip in the value, you should then pull out your money.

Ø  If you have any risky investments, sell them and buy safer investments. No investment is worth keeping you awake at night.

Ø  Do not put your money into any investment that you do not understand or you are not sure about.

Take care of the small things and you can be sure that your investment is well protected.