Building a reasonable retirement plan. Determining your time frame, and 6. As each of us enters different stages of life, our changing family status and objectives, incomes, expenses and living standards shape our investment strategy. By having a clear idea of what you want your investment to accomplish, you'll be able to put your money to work more productively. Investing is generally defined as the conversion of risk-free assets into risky ones with prospects of greater return.
Every investment has a certain amount of risk associated with it.
You can minimize risk, if you are able to understand the different characteristics of the various investments and build your portfolio accordingly. Because historically, the existence of greater risk is commensurate with greater rewards for investors. You are almost certain to pick a bad investment sometime. The secret then is to cut your loss as soon as possible. Unfortunately, most people find this very difficult to do.