Good Investment Habits: Pre-investment Checklist for Beginners

Healthy investment habits can help you lay a solid and stable financial foundation. Before investing, you should develop a pre-investment checklist that lists out items that you should pay attention to. It will help you understand your personal circumstances and the market condition, choose products that fit your needs, and prepare for your portfolio.

Developing a budget is the first essential step before investing as it will give you an overview of your income and expenses. You should prepare a budget and allocate your monthly income to different items, such as daily living expenses, savings, debt repayment, and investment. By tracking your income and expenses, sticking to your budget, and saving regularly, you can maintain financial health and ensure that you have sufficient savings to invest.

It is important to evaluate your risk tolerance, which depends on your financial condition, investment horizon and risk preference. You may assess it by using an investment questionnaire or various risk assessment tools, and, based on the result, create an investment portfolio that may include different products, such as stocks, bonds, funds, and gold. For instance, if you have a low risk tolerance, you should opt for a more conservative portfolio. Besides, it is also crucial to do your own research before selecting any investment products. You may review the documentation, corporate financial statements, market news and analysis related to the products to gain a better understanding of the market trends, company background and performance, and the merits and demerits of the products.

You should always choose a licensed trading platform and compare its reputation, fees, and operation before investing. You may check if an intermediary or trading platform is licensed on the public register of licensed persons and registered institutions on the Securities and Futures Commission’s (SFC) website. Moreover, you should take a look at the alert list that contains unlicensed entities and dubious websites on the SFC website before opening an investment account. It is always wise to review the fees and related terms carefully before trading any investment products to prevent loss.

Last but not least, you have to review your investment objectives and portfolio regularly. The constantly evolving investment market and economic conditions mean that it is important to assess and manage your risks regularly, and adjust your investment objectives and asset allocation accordingly to ensure that they are properly adjusted and managed to reflect the market conditions. Since health investment habits play a key role in good wealth management, you should start your investment journey with a sound pre-investment checklist now!