5 Questions to Ask Yourself Before Signing an Investment Deal
The world of investments has been growing in every aspect of our lives. We invest in cars, real estate, technology and a lot more, despite the knowledge that risks lie behind each of these investments. Moreover, the media fuel in to the speculations and doubts into signing investment deals. In this article, we will tackle about essential questions you need to ask yourself before signing an investment contract.
1. How much cash do you have?
When you invest, you gamble your money out and lend it to the business, corporation, and the like that gets to use your money for growth. So the smart thing to do before signing an investment deal is to double confirm that you have enough financial reserves to circulate and use when you decide to put aside that money for investment. Put on some realistic projections to those numbers and make sure to set aside money also for emergencies (e.g. sicknesses, natural disasters, house repairs, etc.). Evaluate how much cash you have, plus the amount of your assets, liabilities, recurring utility bills and monetary responsibilities, and how much you can save to keep yourself safe just in case.
2. What are the risks present?
Investing your money does not guarantee 100 percent return or profit; it’s not an easy feat but one which holds lots of risks. Capital and risk go hand in hand all the time, when you transact with investment deals. So before sealing that deal with your signature, know the risks present, how much of it you can tolerate and how far you can go to accept the worst case consequences. Hear all the “horror stories” you have to and take advice from mentors and financial investment gurus. Imagine how you can be prepared when you encounter unsettling situations and anticipate the strangest things that can happen—low sales months, economic crashes, calamities, etc. Test your readiness for these risks so that you can be less afraid when you experience these challenges later on. Be honest with yourself and if you feel that you cannot take all the risks ahead, then it might not be time for you to take that deal.
3. What’s your meaning of success?
Know your notion of success and clarify your own thinking of what is pleasurable to have and what is delightful. Of course, the general definition of success from investment is measured by a steady gain or return of money. One popular meaning you can follow is that investment success is one that delivers the results you require, over the specific timeframe you set for that investment. You can go make your own, like if the investment won’t promise or expect at least 50 percent of the original outlay of positive profits in the next five years, then you won’t push it through.
4. How do you get out of the deal?
In every building, there must be an emergency exit. The same is true in investment deals. There’s never a straight-out peachy trend for whatever your money will be invested in. When you think that the market or business you have invested your money in is going right down to the lowest valleys for a long period of time, you have to know how to get out of it. Ask the investment company for the costs and penalties when you decide to take your funds out early. Make sure that exit strategies are present and stated without ambiguities in the contract. The essential thing here is that you should be able to take your money back when you need it.
5. What are your long-term goals?
In every type of investment deal, there’s a time commitment that’s attached to it. See yourself three, five, ten or more years down the road and if you are much confident in investing your money amidst the risks you will be facing in those number of years, then go ahead and sign. If you’re not willing to preserve for a longer time, then consider negotiations or don’t sign at all. Calculate for the return on investment, how much dividends or percentages you can gain as income per year or a certain time period and also consider depreciation of materials in those investments. Be committed to learn how you will implement you investment plan with time to reach your financial goals. Look at the whole money picture through the calendar and follow through to completion.
There’s no such thing as “safe investment,” so better ask these questions first before putting yourself up to some trouble. Investing can expand your riches or steal them away. While recession is just down the alley, fear leads to bad decision-making. Don’t think of playing catch-up with your funds. Manage them smartly and think of good and bad times. Do research, find an adviser and answers to boggling investment questions to break away from ending up in the financial ditch.
Alexis Thompson is a former Mountain Backpacker, Real Estate Sales Personnel and a 26 year old mother of 2 daughters, Sophie and Rhian. She is into almost all types of Music especially The Fray and Hillsong. She also has a passion in Singing and Scrap Booking. Follow her escapades on her Twitter.