Glenis Phillips, the architect of Financial Mappers, has published her Book, Map Your Finances – Learn the Art of Financial Mapping. In the final chapter, she details the Top Ten Tips for an investor. This is a list of those tips.
1. Write a financial plan and start today
It has been proven that a written plan plays an important role in financial success.
2. Diversify assets and buy in favorable cycles
Buy value when the opportunity presents. Over time, you should develop a diversified portfolio of investments.
3. Determine your risk tolerance
The three major risks are loss of capital from falling prices, the risk that inflation will devalue your purchasing power for cash assets, and that interest rates on loans will rise.
4. Don’t rely on average returns
Consider unfavorable returns at critical periods, rather than relying on long-term average returns.
5. Choose good debt over bad debt
Good debt allows you to build wealth by using other people’s money. Bad debt reduces your ability to save and invest by paying interest on items that do not build wealth.
6. Buy property to hold long term and manage shares and cash
To maximize tax advantage and reduce costs, holding real estate long-term will usually deliver a sound long-term income. The volatility of share markets and bonds requires that you actively manage these assets, resulting in shorter time periods of investment.
7. Know your expenses
With the increase in managed investment products and retirement accounts, the multiple combinations are almost impossible to calculate or understand.
8. Set targets for financial independence
Future-proof your financial plan through the use of insurance, building income-producing assets and reducing debt as you approach retirement years.
9. Prepare a retirement drawdown strategy
Your financial plan should include the ability to fund your retirement and protect the income against inflation. Consider how and when different assets will be sold.
10. Invest in yourself through education
Improve your financial knowledge so you can make intelligent financial decisions.
Glenis Phillips SF Fin – Designer of Financial Mappers