Prospects
Investing your hard-earned savings should be a simple and straightforward process. There are many investment vehicles that are available on the market, but each has their own risks and opportunities.
Investment is often a bespoke endeavor, with a multitude of factors that can influence one’s choices. I would often ask the expectations of the potential investors, their time frame, and aversion to risk, maybe even the sources and future uses of their funds. I would mix that up into some kind of stew, add some common economic and historical data, and give them their options.
STOCKS, BONDS, AND SHARES
Investment isn’t as hard or scary as most people think. Wall Street and Hollywood have always painted investing as a world of mathematical labyrinths and secret handshakes, but the truth is it’s really quite simple and straightforward. There are literally hundreds of financial instruments offered by banks and fund companies, each with their own risks and returns.
There are bonds and deposit products that are relatively safe, resulting in a steady interest income. There are mutual funds, which with diversified assets, amplify your investment potential. The complexity has been neutralized, so all you need to do is find a reputable firm with a solid track record before signing on the dotted line.
If you want to be more involved and take charge of your cash, consider investing in equities. The local stock market offers a cornucopia of corporations dealing with different aspects of business, including construction, retail, manufacturing, mining, even gaming. Choose a company and industry you understand and be a shareholder.
For those with a penchant for risk coupled with the potential for high returns, there’s even the foreign ex¬change market. There are options and futures markets as well.
You can also invest in a business as a lot of companies are in need of capital every single day. The potential for growth is there, and if you have a good idea for your own business, funding and growing it would be a fulfilling experience. But it’s not for everyone, of course. Starting and growing a business is a major undertaking, and it will entail risks, attention to detail, and good old hard work.
REAL VALUE IN REAL ESTATE
How about real estate? Real estate and land in particular, is finite, so its value will always increase in time. A building, a house, a piece of land, these properties are tangible; buying them as investments give a psychological sense of security.
Good properties have distinct characteristics which separate them from bad investments. Location is par¬amount. Good properties are in safe, secure communi¬ties with access to good schools and medical facilities. They should be near public transportation and enter¬tainment/shopping areas.
Investing in good properties entail costs, and they do not end after the final check has been paid. There are annual and monthly fees, and maintenance of properties should be factored in as well. If a proper¬ty investment is meant to produce a steady rental in¬come, then this income should pay for expenses and produce a reasonable profit. If one’s intent is to resell the property after a period of time, cost of money should be computed to yield a proper income from the original purchase price.
For each type of investment, there are always risks and potential returns. There is no perfect investment, and we can only look for opportunities that can grow our hard-earned money with the amount of risk we can tolerate. Diversification is key to strike a balance between income optimization and risk management.
Know and understand the different types of invest¬ments, and make your money work for you.
