Your first investment plan is an important step in building a better financial future, but before you start this new adventure it is perfectly natural to have questions and concerns. This is why the team at COCOA have put together 5 of the most common questions all new investors should ask themselves to help them decide if starting an investment plan is right for them.
What am I investing for?
You may wish to start an investment plan for different reasons, from wanting to build up a nest egg for a comfortable retirement, giving your children a head start or just wanting to build a better future, investing could be a great way to bring your long-term goals to life. A good start would be to outline any aims or goals you would like to achieve, this will help you decide how much you might want to invest upfront and what you might want to put into each plan on a regular basis. If you don’t have a specific project in mind yet, don’t worry. Starting early, so your money can start working for you, is more important than setting a goal at the beginning and with COCOA you can always add a goal to your plan at a later date.
How much can I invest?
In the past, you would have needed a considerable lump sum to even consider investing, thankfully with the rise of robo-advisors such as COCOA this is no longer true. Through us, you can access ethical and halal investments and start your first investment plan with as little as $100. You should always only invest what you can afford as most investing should be viewed for the long-term. Some investors draw up an account of what they earn against what they spend each month, this gives them a better understanding of how much they have left over to invest. Regularly putting some of this excess money to work through an investment plan is an ideal way to start to your investment your journey and you can always add lumps sums as you wish.
How long shall I invest for?
Investing should always be viewed as a long-term strategy and the longer you have your money working hard for you the greater chance you have of achieving your financial goals. At COCOA we build personal ethical and halal investment plans designed to grow over the long-term. However, it is important to remember that there are always ups and downs in the market and during the bumps, it is important to remain invested, as asset prices tend to recover over the long-term.
What shall I invest in?
The number of investment options available today can be overwhelming, especially to new investors looking to establish their first plans. From company shares to commodities, to property and bond like instruments, the range and complexity can be intimidating. You could just pick one type of investment such as buying a few companies or property, but then your portfolio will lack diversity meaning you have put all your eggs in one basket, considered by professionals as pretty risky. One way investors can lower their risk is to buy a range of investments, this will reduce the chances of all your investments doing poorly all at the same time. The issue with this strategy is that it can be highly time-consuming and it takes years to build up the knowledge and experience to select and continuously monitor the right investments. A more efficient and cost-effective approach is to buy into professionally managed funds selected by experienced managers. For many investors, the invention of the robo-advisor is perfect at fulfilling this requirement, as it is professional, accessible and cost-effective.
Shall I do it myself?
If you have the time, you may decide to analyze the markets, research assets and rebalance your portfolio yourself becoming your own investment manager. It is worth remembering however that there are many costs involved including account fees and transaction costs that make the do it yourself approach uneconomical for many. It is also worth noting professionals spend years learning the skills and knowledge required to become an investment manager. If you are too busy, or you don’t feel you have the confidence or knowledge to make your own investment decisions you could get an expert to do the hard work for you. In the past a professional investment manager would have only been accessible to wealthy clients, thankfully nowadays through robo-advisors such as COCOA everyone can have access to professional investment management services at affordable prices.