If you could not tell the difference between a REIT return and a Kruger Rand if they walked up to you and bit you, making a beginning in investing is terrifying.

Like a boat setting off to sea, you are more likely to stay afloat and on course if you map out your path. Fear, like a bustling squall, will make your responses volatile, so stick to your travel itinerary and you are more likely to manage the storms with your head instead of your emotions.

-1) Clarify your Investing Goals

Your goals need to be spliced into three broad categories:

1. Your time horizon: How long your investment is intended to take to reach your goals.

2. An Asset allocation plan: How you will minimize risks and drive up returns by scattering your portfolio among a range of asset types and risk profiles. Diversification should be handled according to the types of investments you are choosing to satisfy your specific time horizon.

3. Your risk tolerance: How much risk can you tolerate practically and emotionally?

-2) Create Realistic Expectations

Hoping for the rewards of a high-risk stock from a certificate of deposit will leave you disappointed and unprepared for adaptation. Expectations are like the compass of your sailing trip.

Even a minor inaccuracy can set you far enough off course to leave you stranded. Risks must be managed, and they can only be assessed if you have a pragmatic idea of your potential rewards.

Don't make the rookie mistake of using an investment's history to determine its future. In the world of finance, past behavior is not always a predictor of future behavior.

-3) Clarify Portfolio Goals

If you have diversified carefully, you will be able to split your assets into categories based on their role, goals, and risks. You would not buy stocks today to pay for next month's mortgage, but your property investment may well be stable enough to cover long-term goals like retirement or education funding.

Assign a time horizon to each of your asset classes and clarify the goals you intend for each vehicle. This way, you will know which assets to part with at every leg of your journey if you need to change direction.

Some investment vehicles provide growth potential but carry more risk. Some offer protection of your initial investment nearly as much security as a cash equivalent (CD's) while others provide monthly income such as bonds.

Understand each asset class' role and the risk required to fulfill your goals so that when you need to adapt, you do so with goal-driven 20/20 vision.

-4) Calculate Your Expenses

Investment expenses can have a drastic impact on the performance of your portfolio. Expense ratios should be calculated for each asset class. Mutual funds come with management and operating expenses, and brokerage accounts come with transaction fees.

Front and back-end loads, account fees, and taxes should be calculated to make sure they suit your time horizon and the potential rewards of each asset. This way, your portfolio will remain sturdy, protected, and goal-driven

-5) Choose a Crisis Strategy

If you are taking a boat trip and fail to plan for lightning storms and water shortages, you and your vehicle will end up on the sea floor, and so it is with investing.

When volatile markets strike (and they will) not having a pre-emptively arranged plan will force you to adapt according to your fear, not your intellect. You will keep your head better if you have a game plan for choppy waters.

No sailor arrives at her destination by disrespecting her vessel and the ocean, and no investor attains their goals without respect for their money, knowledge of the investment vehicle, and the economic conditions of the market.

Make equipping yourself to pursue a successful investment strategy to achieve your financial goals a priority.

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