The beginning of a new calendar year is an excellent time to reset your finances and implement strategies. It is never too late to analyse your long-term wealth-building plan and how well it is working neither is it too early to begin investing for those who want to. Therefore, make 2023 the year you achieve your financial goals. You can improve your investment returns by trying some of the strategies below:

Create a personal finance roadmap

Even for experienced investors, investing may be a risky endeavour, and inexperienced investors run the risk of incurring harsh penalties. If this is your first time making a financial plan, you'll need to conduct a comprehensive analysis of your financial situation. You can either decide for yourself or seek guidance from a financial counsellor.

Identify your risk appetite

This may be used to choose the investment portfolio to put your funds in. Generally, returns increase as risk increases. After evaluating your risk tolerance, you decide whether to invest in stocks, bonds, or money markets. If you wish to achieve financial stability, you must be cautious about your risk tolerance. Generally, you should only invest money you can afford to lose. Your risk tolerance will impact your investing strategy. Investors that are ready to take on more risk have access to assets with both high risk and high payoff. Those with a lower risk tolerance may choose to arrange their assets so as to achieve a balance between risk and return.

The strategy for your complete investment portfolio, including any retirement funds, may be defined by your risk tolerance level. Understanding your risk tolerance enables the selection of a plan you can really adhere to. Investing more aggressively than you are comfortable with raises the potential that you may act out of fear, which might be detrimental to your success. For example, if you begin investing aggressively and put all of your money in higher-risk investments, but then become fearful when the market dips and withdraw all of your money from the market just as it reaches its lowest point, you forfeit not only the money you have already lost but also the potential future gains when the market recovers.

Diversify your portfolio.

Diversify your assets across various asset classes to reduce the risk of experiencing a substantial loss. No investment is risk-free or foolproof, but diversifying your portfolio across asset classes and markets will boost your earnings. The three primary assets: equities, bonds, and cash, do not fluctuate simultaneously. Consequently, if one asset performs poorly, the other will perform well. Proper asset allocation will assist you in reaching your financial goals. Without risk, there will be no reward. Diversifying your whole "portfolio" of investments is necessary for building wealth since it enhances your risk tolerance.

A well-constructed portfolio should include stocks, bonds, and other sorts of assets that do not move in lockstep. This reduces the portfolio's volatility without sacrificing its potential return.

Research your investment options

To identify the best investments, you must consider:

How much money do I need to start investing?

When people start planning for their future, one of the most common questions is, "How much of my income should I be investing?"While you don't need much to begin investing these days, the goal is to consistently contribute beyond your first deposit so that you have more funds to grow over time.

But what percentage of your salary should you invest? According to experts, the optimal amount to save is 15% of your pretax income.

Matt Rogers, CFP and director of financial planning at eMoney Advisor, refers to the 50/15/5 rule as a guideline for determining how much you should invest consistently.

50% of your take-home pay should be allocated to essential expenses (housing, food, health care, transportation, child care, and debt repayment), 15% of your pretax income (including employer contributions) should be invested for retirement, and 5% of your take-home pay should be used for short-term savings (like an emergency fund). This leaves 30% of your income for discretionary expenditures, such as entertainment, dining out, or further savings.

The first stage in investing is determining your long-term objectives. Next, ensure that 15% of your pretax income is set aside each paycheck; this is a solid guideline to follow and will help you stay on track.

Remember that investing is not a sprint but a marathon. If you can't afford to achieve the 15% criteria right now, consider increasing your investment commitment annually until you can.