1. Identify your financial goals and timeframe. 

First, determine your investment goals. When do you need to achieve the money? If the investment is for short term or long term goals later, figure out your comfort level with risk for each goal. Short-term investment goals are often for a duration of a year to 5 years. For example, you are investing your money for a year-end vacation or buying your dream handbag. Long-term investment on the other hand is often for retirement, dream home or a child's future education tuition fees. 

2. Understanding your risk tolerance. 

Understanding your risk tolerance is crucial. Understanding how well can you withstand the pressure of price dip will help in setting your investment medium preferences as well as understanding profit estimation. This is due to the fact that higher returns come with higher risk. Thus, if you are a risk-averse who prefers to see your money grow with a calm mind, a high-risk investment might not be suitable for you and vice versa. 

3. Decide whether you want to take a "do-it-yourself" or "manage it for me" approach.

"Do-It-Yourself" - You can open an account with a broker that allows you to self-manage your account; which consists of both purchasing and redemption varieties of investment products including stocks, bonds, CFDs, commodities and many more. The entry and exit point decision will be made solely by yourself. This approach is a good alternative for investors who prefer to be hands-on with portfolio management. 

“Manage It For Me" -  There are several types of investments that fall into this category. For example, many investors prefer appointing a fund manager to help manage their investment for them. This solution is highly recommended for a person with a highly time-consuming career or for those who love to have a professional approach to making investment decisions. 

One of the most beneficial approaches is to appoint automated portfolio management services a.k.a. robo-advisor services in portfolio management. So, how is robo-advisor work? It combines computer algorithms and advanced software to build and manage a client’s investment portfolio based on the client’s risk tolerance and goal and even provides access to human advisory when you need it.

Robo-advisors are often used in hedge funds, so they're generally not a good choice if you're interested in individual stocks or bonds. But they can be ideal for investors who prefer to be hands-off in a professional decision. 

4. Choose what investments match your goals and risk tolerance. 

In determining where to invest, always depend on your goals and be willing to take on more risk in exchange for higher potential investment rewards. 

If you are a risk-taker and can stand high-risk volatility, you can opt for a portfolio with high growth stocks or stock funds, but if you are a risk-averse investor, you can choose a portfolio with more bonds that tend to be more stable and less volatile. 

The best way to reach your long-term financial goals and minimize risk is to spread your money across a range of asset types. This method is called asset allocation. 

For a profitable long term goal, your portfolio can be more aggressive and take more risks to potentially lead to higher returns. Within each asset class, you’ll also want to diversify into multiple investments. You can adjust your portfolio’s risk by adjusting the ratio of each asset class. 

Why is asset allocation important?