Ryan Donovan Granger on How to Make an Informed Investment Decision

Investment decisions can be difficult. After all, you’re essentially spending money that you hope will bring a higher return in the future. There are many factors that need to be considered when making investment decisions. Depending on the risk tolerance and goals, different types of investments may be right for you. In this article, investment strategist Ryan Donovan Granger discusses some of the key considerations you need to keep in mind when investing your money. He'll also give some examples of common investment strategies so that you have a better idea of what they entail and how they might fit into your overall financial plan.

What is your investment objective?

Investment objectives are like financial plans for your portfolio. It helps you establish the reasons behind your investing strategy, and it helps you stay on track. If you have a long-term strategy of saving for retirement, your investment objective will likely be retirement savings, while someone with a shorter-term strategy may be more concerned with paying off debt as quickly as possible. You may also have a hybrid strategy where you try to maximize the return while keeping the risk low.

Your tolerance for risk

This is one of the most important elements to consider when making investment decisions. Because you have different risk tolerances between different people and different financial situations, risk tolerance may vary greatly. Some people may be willing to take on a certain level of risk, while others will be much more conservative. You may even have different risk tolerances depending on the type of investment you’re considering. If you’re considering investments with a high level of risk, such as stocks with high volatility, you may have a higher risk tolerance than someone who is considering a low-risk investment, like a bond fund. As Ryan Donovan Granger explains, some risk tolerance levels are so low that they’re considered “very high-risk”, while others have a very high level of risk and are considered “high-risk”. You should also be aware of how your risk tolerance may impact how you choose certain investments. Certain investments may be more appropriate for someone with a higher risk tolerance, while someone with a lower risk tolerance may be better off with a lower-risk investment.

Your time horizon

This is another important factor to consider when making investment decisions. Your time horizon may be determined by the length of your retirement savings, the amount of debt you want to pay off, or the amount of time you have to save before you need the cash. This timeline will also help determine the type of investment you should consider. For example, if you expect to be in retirement for 10+ years, you have plenty of time to wait for investment returns. As such, you may choose an investment with a long time horizon, like a bond fund. However, if you need to make a withdrawal from your investments to pay for a large purchase, you may prefer a more liquid investment with a shorter time horizon, adds Ryan Donovan Granger.

The type of asset you’re investing in

This is another important factor to consider when making investment decisions. This will help you determine which type of asset to invest in and how much to allocate to it. There are many different asset types that you can look into when making an investment decision. This includes stocks, shares, bonds, property, and more. Depending on the investment strategy you choose, you may want to invest in different asset types. For example, a high-risk, high-reward investment may benefit from investing in shares. A low-risk investment with a longer time horizon might be better off in a fixed-income fund.

The liquidity and leverage of the investment

This is a relatively new addition to investment strategies. With the rise of cryptocurrencies and blockchain technology, many financial institutions are now looking into ways to use these technologies to provide enhanced liquidity and leverage to their asset. Financial institutions are looking into ways to facilitate asset-backed loans, tokenized securities, and more. This is one of the key factors investors should keep in mind when making investment decisions. The liquidity and leverage of an asset will help determine its volatility and whether it’s appropriate for your investment strategy.

Additional considerations

This is just a quick rundown of some of the key factors you need to keep in mind when making investment decisions. There are many more factors to consider when determining the best investments for you and your financial plan. If you’d like to learn more, consider talking to a financial advisor or reading a financial planning book.