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Four things to do when making a second investment

POSTED ON JULY 05, 2021    

You’ve made your first investment? Congratulations on starting your journey towards a good future.

 

Of course, your journey should continue for as long as you have financial goals to reach, and you’ll probably find yourself making another investment. Before you do, here are 4 things to remember.

 

Check your goals

You can choose to use your second investment as a support for your first investment, if you think that it needs it or if you really want to be sure you’ll reach your goal by the time you need the money.

 

If you have another goal, the second investment is a good way to get started on it. Remember, the longer you keep your money in, the better your returns may be.

 

If your budget allows it, having money in multiple investment products for multiple goals is a good way to prepare for all the things you want to have or do in the future.

 

Consider diversification

Before making that second investment, you should look at where your money is currently placed. This will be a good opportunity to increase diversification, which will lower the chances that an event affecting an industry or asset class will make your portfolio’s value drop.

 

For example, if your first investment was in stocks of real estate companies, you can consider government bonds for your second investment.

 

If you have money in a Unit Investment Trust Fund (UITF) or another type of pooled fund, there is probably some diversification that is already happening. However, your portfolio might benefit from diversifying even further.

 

Stay within your risk profile

When choosing a product for your second investment, it would be best if your options fit your risk profile. This helps keep you from taking on more risk with your money than you’d be comfortable with.

 

Remember, staying within your current risk profile doesn’t mean that you’ll be lacking in investment options. You’re still likely to find something that fits your needs and situation.

 

Follow your strategy

If you’re practicing peso-cost averaging for your first investment, you should continue to do this even when you make your second one. In fact, if possible, you should do it for both investment products to enjoy the full benefits in the future.

 

The same goes for any other strategies that you might be following. After all, consistency and discipline go a long way towards helping your investment journey have a happy ending.

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