Delories Jones, senior vice-president of sales and marketing at JN Fund Managers, is urging individuals to assess their finances to check the availability of their funds prior to investing.  

“It wouldn’t be prudent to put money in an investment portfolio until you have gone through a comprehensive financial planning process,” she said.

She suggests that one should commence by reviewing one’s assets and debts by setting up a reasonable debt management plan, factoring in how much is required for an emergency fund as opposed to an investment fund. 

A thorough comprehension of one’s risk tolerance is crucial in deciding which investment options to invest in based on his or her associated risk factors.

“By first undertaking this assessment, with the assistance of a licensed financial advisor, if this is required financially this will ensure that one’s funds are invested in the appropriate investment options,” she said. 

Jones warned that withdrawing funds early from long-term investments jeopardises one’s goals and poses other financial challenges, such as additional fees and taxes.

She recommends the following strategies:  

Know your goal & timeline 

Individuals have diverse investment objectives, including retirement planning, covering children’s university expenses, and purchasing a home.

“No matter what the goal, the key to all long-term investing is understanding your timeline. Typically, long-term investing means five years or more. By understanding when you need the funds you’re investing, you will have a better sense of suitable investment options to choose and how much risk you can afford to take on,” she said. 

Pick a strategy and stick with it 

After setting investment goals and timelines, choose an investment strategy and stick with it. Break up the timeline into segments to guide asset allocation.

Jones stated that based on the target date of goals, one can similarly categorise their investment goals. For example, one could have a five to 15-year goal, a 15- to 30-year investment plan, or one that is more than 30 years, especially in the case of younger investors.   

Familiarise yourself with investment risks

Jones elucidated the importance of understanding the risks associated with investing in different assets before buying them, while also advising continued market monitoring due to changing trends.

“Consulting with your financial advisor can assist you in this process,” she informed. 

Stocks she said are riskier investments and recommends trimming stock allocations as one approaches their goal.  

Diversify for successful investment 

Jones says that spreading one’s portfolio across a variety of asset classes allows one to diversify their portfolio thereby, ensuring a healthy mix of assets which reduces volatility in your portfolio.  

Diversification via mutual funds 

She posited that to improve diversification, one may choose to invest in mutual funds instead of individual stocks and bonds. She said mutual funds provide the advantage of easily building a well diversified portfolio with exposure to a wide range of stocks and bonds. In addition, JN Fund Managers Mutual Funds are managed by professional fund managers. 

“We encourage you to speak with your financial advisor who will guide this process of building a winning investment portfolio,” said Jones.