8 rules for sorted investing

Before you leap into any investment decision, there are some important rules you should follow:

1. Set your goals
   Decide what it is that you are trying to achieve. Where do want to be at some point in the future? What is the final outcome that you want from your investments and what is your time frame? Think about debt - is investing the right option for you right now? Would you be better off using your money to pay off high-interest debt (e.g. credit card, hire purchase), or to reduce your mortgage?
    
2. Know your risk profile
   You need to know what sort of investor you are - essentially, how much money are you willing to lose? How much volatility (ups and downs) can you tolerate? To work out your risk profile, use the Risk recommender.
    
3. Know how you want to invest your money
   What type of investment suits your risk profile? Bonds, shares, property, short-term bank investments? Will you invest directly yourself or use managed funds? Sorted’s Investment recommender can help here. Talk to a qualified financial adviser.
    
4. Do your homework
   Research, compare and contrast everything – or get someone to do that for you. Read the business sections of the newspaper; go online; talk to your adviser, bank manager, or accountant.
    
5. Research different companies’ investment options
   If you are going to invest directly in a company, find out which companies suit your profile. Do they offer the type of investments you are after? What are the rates of return for each investment? What is the level of risk associated with the return?
    
6. Research the companies themselves
   What does the company do? What markets is the company in? Who is running the company? Have they ever been declared bankrupt?
   How is the company run? Does the board have independent directors?
   How has the company performed in recent years - is there a steady performance over time?
    
7. Get the right advice
   Shop around for a qualified investment adviser who you have confidence in. See our checklist of what to look for.  It’s also important to know how your adviser is paid and the impact that can have on the advice they give you.
    
8. Spread your risk
   Don’t put all your eggs in one basket – spread your risk around different options and different companies. For example, if you are considering high risk investments, you can balance your risk with other investments in lower risk areas, like short term deposits or cash and bonds.

Visit our Investing section for more information, or order our free Investing booklet.