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Things To Consider Before You Invest In Forex

Oct 20, 2007
There are several things to consider before you invest in the stock market or Forex.

Your Personal Situation: Your age, the state of your health, the number of dependents you support, the kind of job you have, whether you are a man or a woman, what kind of goals you have set for yourself all these, and more, are factors which will bear on your decision whether or not to invest.

There is no rule, no prescription governing these factors, either singly or in combination. Again, the decision is yours. It is well to wonder, however, whether your personal situation contains any elements which might conflict with your freedom, need, or desire to invest.

There is, for instance, no age more appropriate than another for investment. But it is conceivable that a young man might find family obligations, such as a new house, absorbing all his resources, that a middle-aged man might prefer to invest surplus funds in his business, and that an elderly man might feel he is too far along for the amount he is able to invest to bring him any significant return.

On the other hand, a young man, if he is able to invest at all regularly, can look forward to a fairly considerable estate in 30 or 40 years. A middle-aged man who finds the premiums for a new insurance policy higher than he feels like paying might decide that investments might help cushion the requirements of the years past 60. And an elderly man, with family responsibilities and obligations behind him, might decide that a sturdy stock returning a comfortable 5 or 6 per cent is better than the interest rate he can get at a savings bank.

As these, examples indicate, age--or any other single factor--immediately involves other considerations.

Good health helps guarantee steadiness of income. Poor health suggests the need for a larger-than-usual emergency cash reserve. A number of dependents may mean that there is nothing left over for investment, or that the surplus should be invested more conservatively than in stocks, or that the surplus, with reinvested dividends, could provide a college fund in 15 years.

The kind of job you have is important only in so far as it relates to steadiness of income. If you operate on a system of incentives, bonuses, and options of one sort or another, you may wish for more stability than stocks offer, in the kind of investment you undertake. If you have a year-in, year-out salary level, stocks may be just the thing to give you that wished-for extra edge.

Or it may be just the opposite. As a bonus man you may have learned to live comfortably with the prospect that one week may be up and the next one down. And, as a steady Joe, you may find it more alarming than it's worth to have the price and value of your holdings vary.

Whether you are a man or a woman will not have much to do with your readiness to invest. For, surprising as it may seem, the Stock Exchange survey referred to earlier showed that there are more women shareholders than men. Out of the 12.5 million total, nearly 6.4 million, or 52.5 per cent, are women. For many, investment has become a normal and acceptable way to put money to work. There is no telling, either, how many women, having inherited stocks, have since taken a lively interest in investment as part of the responsibility of preserving their capital. Certainly brokers will tell you that women customers are no longer the rarity they once were.

The kind of goals you have will very often be bound up in just such things as whether you are young or old, in business or retired, childless or the chief of a tribe; and the achievement of many of them will require money. If that is so, investment is worth serious consideration. Some people, of course, may prefer to invest in books, or paintings, or travel, and for them the attention that must be paid to investment, or the attractiveness of the financial reward may just not be worth their while.

The story is told of the two salesmen who met in the club car on the train. "How's business?" asked the first. "Oh, very good," said the second, "and yours?" "Fine, fine," said the first. "Got orders for a thousand gross last week. I sell buttons."

"Really," said the second. "I've had one order in the last three years." "You call that good?" said the first. "Well," answered the other, "you see, I sell suspension bridges."
Like the salesmen, the investor must have a clear notion of his goals and expectations, must realize that what is normal and acceptable to someone else might not be what he would choose for himself.

The Kind of Person You Are: Consideration of your goals and their relation to investment brings up the final point of personal evaluation: yourself. For your goals are necessarily a reflection of your temperament and personality.

Go beyond your goals and see if you can pin down the traits and characteristics they stem from. Are your goals-- and you--realistic? How do you regard money, and how do you handle it? Are you easy-come, easy-go? Or do you count the pennies? Are decisions involving money difficult for you to make? Are you on top of your budget, or always running to keep up?

When investing in the stock market, long term commitment is usually more successful and more money will be needed, but with Forex a smaller pool of money can be used for good results.

Forex is more speculative so you will need to be prepared for more risks and swings in your profit and losses.

Using good Forex software will help to limit your losses on Forex.
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Free Forex Software For You To Use: Download Free Forex Software http://www.greatpublications.com/forex.htm
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