Kerry-Ann Spencer, Contributor

Spencer

The adage 'save some for a rainy day' is rather useful in all walks of life, including one's financial life, as it teaches saving as one of the basic tenets of living. This basic rule of life is really important when one considers the many dreams we have for ourselves and loved ones. We all dream of being able to live comfortably and afford the necessities in life or even luxuries. The hope of bringing these dreams to realities should form the basis for us to make wise investment decisions.

While there are numerous investment options available in the financial market, only a few uniquely matches one's needs. The first thing you need to do then, is to find the best options to suit your needs; or may I be bold enough to state the options that others (such as investment advisors), know will suit your needs.

Risks

A few things are generally taken into consideration when investment options are being recommended to an individual including age, risk tolerance, financial goals, income and expenses. In general, a young professional will be advised to take more risks than older individuals, given their longer lifespan to cope with the fluctuations that risky investments may bring.

Many of the wealthiest people in the world often admit that risky investments generate the most favourable returns - although one should be aware that these same risky investments can also result in losses in the short-term. Not to worry, once these risks are measured they can be controlled and as such, minimise the risk of loss while maintaining high returns.

For example, a 25-year-old female who dreams of buying a townhouse by age 30, still has quite a bit of time to build wealth. She will likely have a higher tolerance for risk. Assuming that she was saving $10,000 per month in a traditional savings account over the past two years she would likely have accumulated approximately $250,000. Continuous saving of the same amount over the next five years, but in a portfolio comprised of 60 per cent or more in stocks, she would be very likely to reach that magical down-payment of $2.5 million.

But, why stop there? This and many other long-term goals can be achieved through prudent investment in stocks. What about that dream car that complements the house? Or a solid start to your unborn child's college fund? There are many dreams that can become realities for those of us that are willing to brave the short-term risks, and bask in the long-term benefits.

For further details contact Kerry-Ann Spencer, at info mydbg.com or toll free at 1-888-CALL DBG.