No financial investment is without risks, but some are riskier than others—and some are more expensive than others. Here are a few things to keep in mind before taking any action in the global marketplace:
1. What is my risk profile? For example, how could I benefit and/or be hurt by having a significant part of my assets invested abroad?
2. How diversified is my investment portfolio? For example, how much of my assets are in stocks, real estate such as home equity, gold and silver, and cash. You may want to make a list of everything you own and everything you owe.
3. When making any new investment, be sure to look at the global picture, examining how the new investment relates to your other investments. For example, if you have low debt, you can risk more. If you have high debt, you may want to deleverage, paying down loans and other borrowings. Remember, during times of financial turmoil, cash is king.
4. Gold can often be a good investment during troubled times. You can simply buy gold bars or coins and put them in the bank, or you can buy gold futures or shares in gold companies which tend to do quite well in troubled times.
5. Timing is everything. How quickly do I need to access my money during the years to come? For example, would I like a nice nest egg when I retire, or do I have to pay for my young children’s college educations?
6. Do I need the services of an investment manager? For example, during the current economic downturn, many funds have underperformed the benchmarks—if you’d simply invested in the index itself you would have done better than the fund you’re paying one to 1.5 percent per year in fees. Many index funds only charge a quarter to a half of a percentage points—and provide better returns than many of the managed funds.
7. If you’re unsure where to start, think about hiring a financial advisor on a one-time basis to get a general overview, so you can make investment choices that are right for you. But be careful of who you choose, they may want you to invest in their own funds so they can earn a commission in addition to what you’re paying them for the advice. Caveat Emptor.