Finding the Best Investment for You
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Posted On :
Jul-08-2009
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Article Word Count :
526
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When it comes to investing, a lot people are puzzled as to what type of investment vehicle they should put their money in. Choosing the best investment is often difficult simply because there are too many options out there.
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When it comes to investing, a lot people are puzzled as to what type of investment vehicle they should put their money in. Choosing the best investment is often difficult simply because there are too many options out there. If you ask a stock broker, he would say that investing in stocks, particularly in blue chip companies, is a great idea. If you approach a bank manager, he would suggest that placing your money in a time deposit is a wise choice. An insurance agent, on the other hand, would argue that a life insurance policy is always a safe investment. In other words, it really depends on who is giving the advice.
Investment advice, however, should be dependent on who is asking the advice, not on the one giving it. So the next time a financial planner or adviser tells you what the best investment is, refrain from giving in immediately no matter how large he promises the rate of return would be. Remember that not all advisers or planners have your best interest at heart. Instead, think about it for a while and ask yourself if the investment really suits you. There are other issues to take into account. Here are the important factors to consider before you begin investing your money;
Purpose
What is the investment for? Where do you want to use it? Common objectives for investing are retirement, children’s education, purchase of a dream house, or accumulation of more wealth.
Time frame
When do you need the money? How long can you wait before you can get your money back? With that in mind, there are three terms that investors follow to determine their investment time frame; there’s short (less than a year), medium (1-8 years) or long term (more than 8 years). Putting your money in short term investments when you will need your return in the long term is unwise because you will not see a good appreciation of your investment as short term investments generally provide low yields. It is likewise foolish to invest in long term when the money is for the short term because the money will be locked during the time you will need it, thereby penalizing you with financial charges should you liquidate your investment prematurely.
Risk Tolerance
Always keep in mind the rule of thumb in investing—the higher the risk, the higher the return. Investment shoppers are usually conservative, moderate, or aggressive. It is up to you to decide what category you fit into depending on your risk appetite.
Acumen
There are simple investments and there are complex investments. Stick to what you know. Never invest in something you do not understand.
Investors are sometimes too prompt in choosing an investment. Before making an investment decision, it is best that you adhere to the principle of suitability. There are several kinds of investments, but you have to be sure that the particular investment suits you well. Hopefully the aforementioned four-step approach will be able to guide you in determining what type of investment is best for you.
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Article Source :
http://www.articleseen.com/Article_Finding the Best Investment for You_1609.aspx
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Author Resource :
About the Author:
If you have ever taken out any payment protection insurance it may have been mis-sold and you could be entitled to claim it back. Real Claims specialises in PPI Compensation Claims and can help you claim your money back. Alternatively if you face financial troubles Wilson Field offer free Debt Management Advice.
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Keywords :
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