Smart Investment Principles

Smart Investment Principles With Amida Wealth

You do not have to be enormously wealthy to require an investment strategy. At Amida Wealth we offer sound economic advice that works at any level regardless of the size of the investment. A good strategist such as Sun Tzu would say “Know your enemy and know yourself and you will have no fear.” We know your risk tolerance and understand your goals. We move beyond the typical by identifying opportunities that would be missed if we did not know you so well. Our strength is in our resources, all custom designed to help you build a strong financial position and portfolio that does the most good with your investment dollars while minimizing risk.

Expand Your Knowledge, Expand Your Wealth

When it comes to investment principles, there is no shortage of self-help material out there. In other words, It can be confusing especially when you get conflicting ideas. Understanding a few key investment principles can be a great place to start. Use these key concepts to help you understand what it takes to create an investment portfolio that’s designed to pursue your investment goals! Wealth is a mindset. In other words, expand your knowledge – expand your wealth.

Estimate Your Time Horizon For Your Investment

Time horizon investing is all about planning, thinking about your goals and selecting investments based on the amount of time you have to meet them. Generally, if your time horizon is short, you may be more comfortable with a more conservative investing approach. For example: If your child is headed to college in five years, many people would say you have a mid-term horizon. You may want to be less conservative with your investing approach and have a larger exposure to equity and equity like investments. When you have a long-term horizon, you may consider adopting a more aggressive approach. If you intend to retire in 10–15 years, having a larger exposure to stock investments may make more sense. One way to lower your exposure to stock market risk is by investing for the long term, which gives your money time to recover from periods of market fluctuations and loss.

Know Your Risk Tolerance For Your Investment

Risk tolerance is your ability and willingness to experience a fluctuation in the value of your investments. It is often associated with the higher the risk, the more volatility in your investments. remember, volatility goes both ways – up and down. Risk tolerance is an important component in investing, as risk tolerance often determines the type and amount of investments that you choose. It’s a good idea to ask yourself some pointed questions and be honest with the answers. In other words, How much tolerance do you have for risk? What happens to your outlook if the value of your investment drops? How much could you lose and stay in the market? Perhaps consider getting a second opinion on your investment strategy with an advisor at Amida. Reassess this often because what we’ve found is that as you become stronger financially, your risk tolerance tends to also shift. Increase your knowledge, create a support system around you, and watch your wealth grow!

Different Investment Risks

Investment risk can be managed but it can’t be eliminated entirely. All investments carry some level of risk. Even when you do nothing and leave it in a savings account. And in general, the greater the risk an investment carries, the higher its potential return. First, with the lowest risk—and the lowest potential return—are cash alternatives, such as certificates of deposit, which are generally considered to be relatively “safe“ investments. Second, are Debt instruments, such as government bonds. These offer slightly higher return, but at slightly higher risk. It’s important to remember that bond prices, including on government bonds, rise and fall daily. Third, are stock investments, which offer the potential for higher return, but they also have a higher risk. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

Risk Can Come From Different Sources

Risk can come from different sources. These may include economic risk, market risk, interest-rate risk, political risk, and tax risk. Let’s take a closer look at one of those risks: market risk. If the overall stock market trends lower, many stock prices would be expected to trend lower as well. Conversely, if the market trends higher, many stock prices may move higher. It’s like the old expression, “A rising tide lifts all boats.” On the other side of the scale are company-specific risks. These are risks that are unique to the company, such as a delayed product launch, unexpected expenses, supplier problems, and a management shakeup. By buying stock in an individual company, you are agreeing to accept a certain amount of company-specific risk. Another risk that many don’t consider often is tax risk. Understanding your particular situation is an essential part of any financial planning.

Diversify Your Investment

Diversification suggests that a portfolio of different kinds of investments, on average, may potentially yield a higher return and pose less risk than any individual investment. Diversification is an approach to help manage investment risk. There’s more to diversification than simply spreading your money around to different investments. In principle, you want to select investments that have a low correlation with each other. That is, investments that don’t tend to behave the same in a market environment. One measure of correlation is called the “beta.” Beta is a measure of a stock’s correlation with the overall stock market. Beta is a measure of how likely a stock is to move up and down as the overall stock market moves up and down.

Consider Taxes And Inflation

Smart tax planning will not only save you money but lower your stress level. Simply put, a sound tax strategy will help you reduce the amount of taxes you will owe at the end of each year. Perhaps some taxes can be deferred, and others can be managed through tax-efficient investing. These questions can be answered if you have strong tax management. Amida Wealth will work side by side with your tax advisor to develop a proactive strategy to manage and mitigate your taxes. We craft tactical approaches to ensure the most beneficial timing of income and deductions, and help you manage tax season for minimal impact.

Taxes May Take Part Of Your Return

Americans pay income taxes, Social Security taxes, sales and excise taxes, and property taxes. The same concept occurs when you put your money to work. Taxes may take part of your return. So when you are looking at the return on an investment, ask yourself, “What is my return after taxes?” Another silent thief you have to watch out for is the effect of rising prices, otherwise known as inflation. Over the long term, inflation erodes the purchasing power of your income and wealth. It’s easy to see; just look at prices from 1967. In 1967, a new house cost $14,250. Income was $7,300 per year. A gallon of gas cost 33 cents, and the average cost of a new car was $2,750. In 2017, the average price of a new home was $402,900, the median income was $61,372 per year. The average price for a gallon of gas was $2.42, and the average price of a new car was $36,113.

Get Started Now

Procrastination can be costly. For example, if you were to deposit $250,000 in an account earning 6%, at the end of 20 years your account would be worth $801,784. If you waited five years before starting your investment program, the $250,000 would have 15 years to work and would grow to $599,140. And if you waited 10 years, then started your program, you’d only end up with $447,712. In other words, waiting 10 years to start was a $350,000 decision.

When you’re ready to move forward, You want to identify all your sources of income and where your money is going. Next, put together a simple balance sheet. This should give you a good snapshot of your assets and liabilities. Identify your long-term, medium-term, and short-term financial goals. Then, be honest with yourself about your tolerance for risk. Can you stomach big market swings or are you more comfortable with less volatility? Once you have sized up your personal finances, you may be ready to discuss your situation with an Amida advisor. And if you don’t know where to start, we do!

Amida Wealth Family Conversations

At your next family or friends gathering encourage the topic of investment strategies. Do your family and friends seek out knowledge from advisors? Have they ever worked with a professional? Where do they struggle most? Additionally, where have they achieved the most success? Listen intently as you engage in these conversations. Discover where you stand, and how you can better support yourself through your wealth journey. Perhaps connect with an advisor to help you strategically invest into your wealth and encourage your family and friends to do the same. As a community, we can become more educated and confident in our financial decisions. Wealth is expansive – share Amida Wealth with those you love!

Final Thoughts

Following a few smart investment principles can make your investment efforts much more effective. But it doesn’t end there. Effective investing requires an ongoing effort. In other words, there’s a lot more to know. Amida Wealth is here to support your abundance in this life, we are one phone call and email away!



218 NW 24th street

MIAMI, FL 33127

Tel. +1305.809.0790



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