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5 Tips to make better investment decisions

Moneymagpie Team 6th Mar 2024 No Comments

Reading Time: 5 minutes

Investing can feel like navigating a jungle if you’re not sure where to start. It’s full of potential treasures but equally riddled with pitfalls. The good news is, with a few smart strategies under your belt, you can make your journey through the investment world a lot more rewarding. Here are five golden tips to help you make better investment decisions.

  1. Start with a Clear Goal
  2. Educate Yourself
  3. Diversify Your Portfolio
  4. Understand Your Risk Tolerance
  5. Review and Adjust Regularly

1. Start with a Clear Goal

When you begin investing, think of it like planning a road trip. Before you start, you need to know where you’re going. This is your financial goal. It’s like picking a destination before you hit the road.

  • Know Your Destination: Just like choosing a vacation spot, decide what you want from your investments – is it short term – is it a long term income trust. Is it a new house, a college fund, or comfy retirement? Your goal guides the way.
  • Map It Out: Once you know your destination, plan how to get there. If you’re saving for a big goal far in the future, like retirement, you might choose a different path than if you’re saving for a car in a few years. This plan is your investment strategy.
  • Checkpoints Are Key: Imagine your goal is a city far away. Along the way, there are signs telling you if you’re on the right path. In investing, these signs are your check-ins. Every now and then, look at your investments to make sure you’re still headed towards your goal.
  • Be Ready to Take Detours: Sometimes, roads close or there’s a faster route. Your life can change, like a new job or a baby, and your investment route might need to adjust too.

By starting with a clear goal, you’re not just wandering around hoping to end up somewhere nice. You have a destination, a map, and a way to check you’re still on track. This makes your investment journey more likely to end up where you want it to be.

2. Educate Yourself

Before you jump into the world of investing, it’s like learning to swim before diving into the deep end of the pool. You wouldn’t want to dive in without knowing how to swim, right? The same goes for investing. Here’s how you can start:

  • Read Up: Imagine your investment knowledge as a toolbox. To fill it, start reading books, articles, and websites about investing. Think of each piece of information as a tool you can use to build your investment future.
  • Understand Investment Types: Stocks, bonds, mutual funds, oh my! There are so many types of investments. Each one works differently. Like choosing the right tool for a job, picking the right investment depends on what you’re trying to achieve.
  • Learn About ESG Investment Trust: This is a special kind of investment that looks not only at making money but also at doing good. ESG stands for Environmental, Social, and Governance. By choosing an ESG investment trust, you’re putting your money into companies that care about the planet, treat people well, and are run in a good way.
  • Talk to Experts: Sometimes, talking to someone who knows the ropes can be super helpful. This could be a financial advisor, a family member who’s good with money, or even a teacher.

By educating yourself, you’re building a strong foundation. Think of it as putting on your swimming gear, warming up, and then slowly wading into the water, ready to make a splash in the investment world!

3. Diversify Your Portfolio

“Don’t put all your eggs in one basket” is timeless advice, especially in investing. Diversification helps you spread risk across different asset classes, industries, and geographical locations. When one investment might be down, another could be up, balancing out your potential risks and rewards. A well-diversified portfolio can withstand market fluctuations better and provides a smoother ride on your investment journey.

4. Understand Your Risk Tolerance

Understand Your Risk Tolerance

Imagine you’re choosing a roller coaster to ride. Some people love the huge, fast ones with lots of loops. Others prefer a gentler ride. Investing is a bit like picking your roller coaster. Knowing how much “thrill,” or risk, you can handle helps you choose the right investments.

  • What’s Risk Tolerance?: It’s a fancy way of asking, “How much can you handle the ups and downs?” Just like some people can eat a ghost pepper without blinking, some investors can see their investments go up and down without worry. Others might lose sleep if their investment drops a little.
  • Find Your Comfort Zone:
    • Age Matters: Younger people often can take more risks because they have time to recover if things go south. Older folks might want to play it safer because they have less time to make up for losses.
    • What’s at Stake?: Think about what you’re investing for. If it’s for something big and important like retirement or college, you might be more cautious.
  • Take a Quiz: Many websites have quizzes that help you figure out your risk tolerance. It’s like a quiz that tells you which superhero you’re most like, but for investing!
  • Review Regularly: Just like your taste in food can change (hello, liking broccoli as an adult!), your risk tolerance can change too. It’s smart to check in on it now and then.

Understanding your risk tolerance is like knowing what kind of roller coaster you’re ready for. It helps you pick investments that won’t give you a bigger scare than you’re looking for!

5. Review and Adjust Regularly

Think of your investments like a garden. Just like plants need water, sunlight, and a bit of TLC to thrive, your investments need regular check-ups to grow strong and healthy.

  • Why Check In?: Markets change, just like the seasons. A sunny period can turn into a stormy one. By checking your investments, you make sure they’re still right for you, just like you’d check if your plants need more sun or water.
  • Make Tweaks: Sometimes, a plant outgrows its pot or doesn’t get along with its neighbors. Your investments can be the same. Maybe one part of your investment garden is taking over, or not getting enough attention. Adjusting your investments keeps your garden balanced.
  • Set a Schedule: Mark your calendar for a regular “garden check.” This could be every few months or once a year. It’s like setting a reminder to water your plants, so they don’t wilt.

By reviewing and adjusting your investments regularly, you’re helping your financial garden flourish. Just a little bit of care can make sure it stays beautiful and bountiful for years to come!


Making better investment decisions isn’t about predicting the market perfectly; it’s about setting yourself up for success with smart, informed strategies. By setting clear goals, educating yourself, diversifying your portfolio, understanding your risk tolerance, and reviewing your strategy regularly, you’re well on your way to navigating the investment world more confidently.

Remember, investing is a journey. There will be highs and lows, but with these tips, you’re better equipped to make decisions that align with your financial goals and risk tolerance. Happy investing!

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

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Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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