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How to Research Your Investment Options

How to Research Your Investment Options
October 29
16:49 2015

If you are keen on entering the investment market, knowledge and understanding are your primary weapons. This underpins every decision that you take as an investor, from the selection of individual markets and asset classes to the development of a diverse and profitable portfolio. It is also important to factor in information regarding the wider economic climate, and this is underlined by the volatility currently impacting on the Chinese economy and other regions across the globe.

How to Research your Investment Options: Investing tome to make Money

If you are to effectively collate such information, you must be willing to invest considerable amounts of time into researching your chosen markets. This should be done in a considered and ultimately strategic manner, as you look to understand both the mechanisms of your marketplace and the wider trends that can drive change. With this in mind, here are some practical steps that can help you to research your investment options successfully: –

Review Markets and Understand your own Tolerance for Risk

The first step is to appraise the range of markets, assets and commodities available, using their unique nature, wider economic trends and your own philosophy as your measures. From the perspective of the markets themselves, you will need to review the way in which they work and how you will be required to interact with them. Derivative products are more vulnerable to volatility than others, for example, while options such as dividends are decidedly more reliable and deliver fixed, quarterly returns.

Your own appetite for risk is also an important consideration, as this will arguably have the biggest influence on your final choice of investment. Once again, the margin-based nature of derivative options means that they offer both higher risks and returns, while choosing to invest in commodities such as gold is less profitable but at least affords you a secure store of wealth. It is therefore crucially important that you select an option that suits your tolerance for risk and innate philosophy as an investor, and ensure that this is reflected by your entire portfolio.

Access both real-time and historical data

With any type of research project, the key is to ensure that you access the best and most suitable resources. So once you have selected your market and preferred asset classes, the next step is to access data sets that provide you with an accurate and actionable insight. For most markets this means using historical and real-time data, as you analyse price shifts, peaks and any trends that have impacted on value over a fixed period of time. The careful analysis of your market will not only help you to make an informed decision, but it will also enable you to tailor your trades depending on whether you require short or long-term gains.

On a final note, ensure that the data used offers the best insight into a specific market. Forex investors should focus primarily on the analysis of current and real-time data, for example, while dividend investors will find more value in the review of historical trends and prices.

Use real-time news and resources to Plan your investments

While it would be easy to halt your research once you have settled on a market and developed your strategy, this can sound the death knell for your long-term success. All financial markets are fluid and evolutionary, meaning that they are likely to change over a concerted period of time. To ensure the validity of your data and the viability of your decisions, it is therefore important to review real-time news resources and tools on a regular basis.

One of the best tools available to investors is an economic calendar, which lists the major events and data releases scheduled for the current twelve month period. Investors will find it particularly useful when attempting to forecast trends and short-term fluctuations before tailoring their trades accordingly.

Image credits to : Emilio Labrador

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