Classic mistakes before every long-term investment decision

Long-term investment is considered the most suitable investment method for an individual to achieve financial goals. The concept of most investors before starting is to research which land or stock to buy. However, Mr. Nguyen An Huy - Personal financial planning expert at FIDT Investment Consulting and Asset Management JSC - believes that what is needed is a comprehensive investment plan.

Accordingly, investors need to determine their own risk profile. Do they need capital growth or cash flow generating assets? Normally, cash flow generating assets will not help us grow capital well. On the contrary, good capital gain generating assets often do not generate cash flow.

"Each person also needs to determine the appropriate investment period for each investment cycle of each type of asset. At the same time, ensure the diversification of the portfolio. A portfolio with too many stocks or too many real estate codes is not a good portfolio. Maybe due to overconfidence bias, we have favored one of these two traditional investment assets. Diversifying the portfolio will help us maintain a better mentality throughout long investment cycles, avoiding the FOMO mentality" - Mr. Huy said.

Next, you need to check the liquidity of your entire portfolio. In general, real estate prices will be less volatile than stocks. However, stocks are much more liquid than real estate. In the same real estate class, apartments are more liquid than agricultural land. Ensuring that your entire portfolio is liquid at an appropriate level will help you easily switch between different assets when other investment opportunities arise in the future.

Finally, Mr. Huy emphasized that a long-term investment portfolio cannot lack a reserve fund and a life insurance contract. This will help you avoid having to sell assets in times of emergency, helping to keep investment assets throughout the minimum investment cycle.

The expert explained: "Imagine an investor investing in a piece of agricultural land with great potential for the next 7 years. If that person unfortunately gets seriously ill and has not yet bought insurance, then he may have to sell that potential land at a low price."

After completing the above steps, it is time to build an investment portfolio. This is the time to answer the question of which stocks or land to buy. Then, because you have prepared well, you can invest successfully in the long term.

Source: https://laodong.vn/kinh-doanh/sai-lam-kinh-dien-truoc-moi-quyet-dinh-dau-tu-dai-han-1379058.ldo