Key Investment Questions to Ask Yourself

Investment Questions

Life can come at you pretty fast, and there is never a shortage of questions to be answered.  What should my next car be?  How can I lose that last 5lbs?  Will Milli Vanilli ever make a comeback? Unfortunately we can’t help you tip the scales in your favor or tell you if the best Lip-Sync band in the world will ever make another appearance.  We can however, help you with some great questions you need to ask yourself before you start or continue your investing journey.  

These questions aren’t exhaustive of course, and we recommend if you still have questions that you talk with a professional, like say someone at Devoted Capital!

  1. What are your investment goals?
    This may seem like a no brainer, but the truth is, the majority of investors don’t create goals, especially when they are first starting out.  You need to ask yourself questions like, “What do I want to do with this money?” Maybe you want it to help with current living expenses or for a specific purchase like a home or a new car.  Maybe you are planning for retirement.  Whatever the goal, identifying what the money will be used for is a crucial step in the investment process.  Investing in a long term goal vs a short term goal can radically change your approach and the investment types you should consider, so be sure you don’t skip this question.

  2. How liquid does the investment need to be?
    No, we aren’t talking about investing in water companies when we say liquid.  Liquid refers to how easily you can get access to your money in the event you need it or want to use it.  If you know you are going to need a portion of your investment dollars for something in the short term, it probably doesn’t make sense to put everything into a retirement account like an IRA or 401k.  Yes, you can pull money out of these accounts whenever you need to, but if you don’t meet the requirements, you can be hit with hefty taxes and penalties. 

  3. What is your risk tolerance?
    Are you a risk taker or do you like to play it safe?   You need to think about what the impact of a loss would be on your financial goals.  Can you afford to lose a portion or even all of your investments and still not have it affect how you live day-to-day?  Risk is generally associated with return.  You risk more because you see a potential for a bigger return.  On the flip side, less risk usually means a lesser return.  Be honest with yourself about the type of investor you are. Knowing your risk tolerance and the type of investment vehicles that align with your tolerances and overall goals is extremely important.  

  4. What is the impact on your taxes?  
    You know by now that Uncle Sam has his hands in everything. Your investments are unfortunately not immune to his superior collecting skills.  You have to think about the potential impact your investment strategy can have on your taxes.  If not planned properly, you can get stuck with a surprise tax bill that can devour any profits you might have made and quickly derail your goals.   We of course always recommend talking with a financial professional like the ones you will find at Devoted Capital or a good CPA or tax specialist. 

  5. What is the economic outlook?
    This question can sometimes be a little hard to answer.  You can monitor things like the markets, unemployment rates, inflation and interest rates but past trends don’t always predict future results.  In other words, just because a previous period of high inflation caused the real estate market to grow, that doesn’t mean it will happen again.  Using historical patterns and trends to help you with making your investment decisions is of course better than flying blind, but just remember there are no guarantees. 

  6. How much money do you have to invest?
    There are so many different ways you can invest your money but they are not all created equal.  Certain investment types like stocks usually require a much larger investment amount than say a mutual fund or an IRA. Make sure the investment vehicles you are considering, support your specific scenario. Remember, the great thing about goals is they aren’t set in stone and they can change! Your investment strategy might look completely different in 2 years from now so be sure you monitor and stay on top of your plan. 


Again, this is not an exhaustive list of questions, but if you answer these honestly and completely, you should be more prepared for the financial journey a head of you.  If we can help in anyway, please contact us today! 

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