What is your financial goal?
What is your risk appetite?
What is your investment period like?
When will you exit from your investment?
Exiting simply means selling or taking your money out of your investment. If you are investing to buy a house, you would want to exit once you have found the right house, planned your mortgage and are ready to make the down payment. If you invest in a stock and were expecting 25% returns but the stock is plunging, it may be better to sell at a loss if you can’t wait.
Is your investment company reliable?
Is your investment diversified?
Experts suggest that you must never put all your eggs in one basket when it comes to investing. This will reduce your risk and assure optimum returns in the long-term. Putting a chunk of your money into a number of airline stocks is not called diversification. If a government regulation gets announced in the future impacting the profits of the airline industry, you would lose a significant portion of your investment. To avoid such situations, you must choose investments that fundamentally different. However, you must not diversify to the extent that you are unable to track your investments and end up paying more in service charges.