Describe (3) ways you will invest in your future based on the principles of finance.

1. Compounding is a way to put money into my future. This involves earning interest both on principal and accrued interest over the course of time. Stone, 2019. You can do this by investing in certificates of deposit, mutual funds that have compound rates for the long-term or other investments. Compounding can make even the smallest contributions to a large amount of money over time.

2. Risk tolerance: My investment strategy will include evaluating my risk tolerance, creating an investment portfolio to reflect this level of risk, and investing in my future. Risk tolerance is an investor’s ability and willingness to tolerate fluctuations in their expected returns caused by changes in market conditions (CalgaryMoneyCoach, 2020). By understanding one’s own attitude towards risk and incorporating it into the selection process when investing – I am better positioned for long-term success given that volatility won’t affect me as much decreasing chances that I may make rash decisions based out of fear or panic selling/buying during downturns.

3. Diversification: Finally, diversification is crucial when it comes down to investing. It means spreading capital across different asset classes (stocks and bonds, etc.). diversification is key to investing. It means spreading capital across multiple asset classes (stocks, bonds etc.) and sector sectors (technology, healthcare etc.)(Investopedia, 2021) reduces one’s overall risk exposure while still allowing for potential reward despite changing markets trends which may adversely impact any single stock/asset class held within a portfolio; thereby increasing chances for greater returns on investment over time.