One of the biggest question marks for an investor with some money to spare is where and how should he invest. An investor can invest in different types of asset classes. The age-old adage of “don’t put all your eggs in one basket” comes to mind here. If we graduate this a bit further, it means that as an investor you must invest in different asset classes and diversify your portfolio of investment. You need to decide what proportion of which asset class you would like to keep in your portfolio.

Here’s a five-step process that can help you figure out how to invest your money right now:

  1. Identify your financial goals, timeframe and feelings about risk.

  2. Decide whether you want to take a “do-it-yourself” or “manage it for me” approach.

  3. Pick the type of investment account you’ll use (401(k), IRA, taxable brokerage account, education investment account).

  4. Open an account.

Choose what investments match your risk tolerance (stocks, bonds, mutual funds, real estate).

Source. www.nerdwallet.com

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