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3 Fundamental Questions to Ask When Investing

“Investing” is meant to be the bearer of a financial prospect: one that promises a brighter, better and more prosperous future. However, the road to a worthy, even slightly successful venture is almost always a narrow one and every investor, novice and seasoned alike, is expected to tread such a path carefully.

Considering the ill effects of investments gone sour, it is important to pay attention to these three important investing questions as the answers to them are deemed invaluable, ultimately.

1 – Have you researched, investigated or asked enough?

Considering the money that hedge fund managers and traders earn, it may be very tempting to find out how they do what they do—but as you navigate your way through investing, take a few baby steps: understand first how the system works! Investing requires, for the most part, a lot of studying. You need to know everything there is to learn about investments, see which performs better and why or when they do, and pick the one that not only leads you closer to your goals, but also poses the least risks and is best performing at a certain point in time.

2 – Are you ready for the risks?

Fixed returns are guaranteed in some investments, such as in bonds, but in this business, nothing is ever assured. Your prospects can rise or dwindle depending on the market conditions, which are ever-changing. And when it comes to investing, be prepared to enjoy the best of its rewards or accept the worst of situations resulting from the risks you agreed to take. U.S. Treasury Securities are backed by the government, but it isn’t exactly a safety net against investment losses.

3 – Can you expect to earn from your investment at an ideal turnaround time?

Income will come as interests, rent, dividends, and more. But while mutual funds have the advantage of being easily sellable, there isn’t any guarantee of you getting the earning you expected, or even the investment itself, back. On the other hand, IRAs and similar forms of investment don’t allow you to cash out easily. It is equally important that the investment is one that you are completely comfortable with. Are you knowledgeable about diversifying your investments? Are you fully aware when and why they perform better at certain points in time? Do you know about the tax implications of these investments?

Whether you’re trying to save for retirement, paying your college debt, or buying new property, it is wise to invest your money and make it earn to fund these goals. And if you’re like most people who hope to achieve your goals within a certain self-imposed timeline, do yourself a favor: give investment a shot. That being said, you need to be completely dedicated into making it work. Take the first few, most basic steps by getting out there and learning (or unlearning) what you have to.

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