Investment is one of the obvious ideas that come to mind when one starts thinking of the utilization of available funds for returns or benefits in the future. Most of the successful people in the world such as Bernard Arnault, Jeff Bezos, Elon Musk, Bill Gates, etc. invested, so it is not out of place when you start to think of investing. The challenge, however, is that some people are reluctant to invest due to the fear of failure or loss of invested funds.
Over the years a lot of investments have gone bad which makes it difficult for people to gather the courage to go in for further investments. I think it is normal, but this fear cannot continue for a long time, you must invest again! Some investments fail because people invest in products by considering only the historical returns forgetting about or having no idea of the associated risk. Do you know that the higher the returns, the riskier it is? So, you must understand that since you want a higher return, you should be prepared to take a higher risk.
What influences investment?
The simple answer to this is Risks and Return.
Before you invest, consider your risk preference. This can be determined by considering how you will react to possible losses in investment. For example, how would you react to a 10%, 20%, or 50% fall in your investment?
You must know how much you are expecting from that investment and ask yourself whether you are prepared to accept the associated risk. Investment is the best thing you can ever think of but can be a nightmare if you do not understand how it works. Surprisingly, most people jump into certain investments just because they have seen others making high returns which I think is not the best because you may have different risk appetites. Some people have gone through emotional stress because of failed investments so do not only look at the returns but also understand the associated risk(s) as well.
There is this common question of “which investment is the best?”
My answer to this question is the right information from the right source. When you have the right information about an investment, you should be able to select the best yourself with no stress. The first point of call for basic investment information is the internet through various search engines such as Google. This however is not a substitute for professional advice. There are a lot of financial advisory services and other experts all over, visit them for a detailed understanding of what you want to do. Note that not everyone that works in the bank or a financial institution can advise on investment. Look for the expert and make sure you understand every information associated with that investment you want to take.
Also, do not be too knowing when it comes to investment, if you do not have the competence seek expert advice there is nothing horrible other than being caught up with an avoidable tragedy.
Let me give you some basic information on the financial market. In terms of the best investment, it depends on your risk preference, as already mentioned. For low-risk investors, “risk-free” investments (such as treasury bills) are good. For high-risk investors, stocks or shares may be preferred. For the intermediate-risk lover, a combination of the two can be helpful. The best way to invest is to have a portfolio, that is a combination of different investment products. Remember the adage “do not put all your eggs in one basket’’.
Maybe you have lost your investment before and because of that you have lost trust for anything investment but understand that idle funds do not make returns or profit. Put yourself together, seek the right information from the right source, decide based on your expected returns and your risk preference to secure your future against financial stress. Investment in the future; you CAN NOT afford to sit on the fence. Join the train!
Daniel Arthur-Mensah, CA