Investments, what comes to our mind when we hear this term? In local parlance it means to put the money in avenue which will give good returns. The need for investments is being stressed upon everywhere be it in the personal life of an individual or be it corporate. The term investment has several meanings. When taken from an economic point of view, investment is related to savings. On the other hand, the meaning of investment from a financial point of view signifies it as depositing money in to some venture with the objective of earning higher gain on a short term or long term basis. Before jumping in to any specific investment plans, it is very important for individuals to clearly understand the varied significance and meaning of this term – “Investment”.
What is Investment all about?
The term Investment is defined simply as – “The act of purchasing financial assets or other products of value with the expectation to earn a higher future returns.” This is a term which normally includes the use of money with the anticipation to earn more money. Investment is a different way of thinking and exploring various avenues to make more money. This is generally considered as a process of investing capital so as to attain increased return normally in the form of interest, value appreciation or income. In Finance, investments consist of acquiring monetary assets hoping to attain better income from the asset or else to sell at a higher price as and when the asset value appreciate.
How to find Low Risk or High Return Investments?
Financial risks are associated with all possible kinds of investment portfolios. For many individuals who have not ventured in to any kind of investments before will have a feeling of apprehension whether the specific investment gamble that they take will yield a higher return on investments with low risk. It is very crucial for investors to achieve a balance between risks and returns. Earning a high rate of returns on any specific investment proposal will work wonders if the investor need not put in much capital in order to reach the specific investment goal. Yet it is imperative to take up a higher risk if needed to attain a significant investment returns as well. It is generally said “Higher the risk, higher will be the return”.
One of the most significant features of a low risk investment decision is that there is a possibility of losing money which is invested. There is no ideal formula for getting returns from investments as the experts may at times loose money. It is important to reduce the risks by closely watching the market trends and investing wisely. Making a low – risk investments helps in getting a low but stable returns or profit margins. Some of the main low risk investments are certificate of deposits (CD), money market funds, bank savings account, government bonds, stocks etc. People who attempt to invest in low risk investments need not do a broad research before putting money in to these potential sources. Often low – risk investments prop up a specific investment portfolio by giving an assured or protected return to the investors even when the market goes down. This type of low- risk investments is suitable for those people who have an unstable career or no fixed income. On the other hand, those who intend to earn higher return this investment option might not work for them as the t margins are low simply because of the fact that risk is also low.
A rewarding investment option for investors will be the high-return one. It is essential for a person to search the different options available for high – return investment schemes. By taking up potential or higher risk constantly, a higher yield can be gained by the investor. High return investments are a good source of added income to the investors. If deciding to get engaged in an investment proposal fetching a higher returns, it is essential for the investor to approach the same with a good degree of skepticism and a better planned approach. In most cases, investors suffer loses just because they expect unrealistic income goals from high yield investment proposals like Real Estate Investment Trusts, preferred stocks, closed end funds, retirement funds etc. This happens if the investor lacks experience in this field and hence they need to do a good research on the prominent aspects of this type of investment and make a decision on the basis of that. High return investments in a way facilitate portfolio expansion as the investors earn higher profit margins.
How to manage Retirement Investment?
Nowadays, managing retirement investment is considered to be a complex task as there are different options available in this area and people find it difficult to choose a specific retirement solution. It is essential to take up a wise investment decision or retirement solution without getting exposed to high risk. This type of investments requires the investors to deposit all the lifelong savings to a good fund which fetch them good returns at low risk and low cost of investment. A frequently asked question in this area is – Where to invest after retirement?
It is crucial for people to follow a goal based investment planning. Equity investments can be opted for long term needs. On the other hand, if looking for quick returns this option is not viable. Mutual funds are suitable for small investors and they can opt for a systematic investment planning. Investing in pension plans, immediate annuity plans etc also fetches a guaranteed income to the investor. A perfect retirement planning must be designed by people to enjoy maximum benefits. It is crucial to start saving before the retirement by devising an efficient plan. Consulting a financial advisor is a good option where in people can get good suggestions about healthy and profitable retirement solutions.
Understand the basics of Investing
An investment is in no ways a complicated task. Apart from being an active investor it is essential to learn some of the very basic concepts of investments before hand. Investment is basically done to create more wealth. Parking your money by investing the same to earn better returns is what investment is all about. It is crucial to identify the specific need for which investment activity is carried on. Understanding the investment needs will help to create a specific plan and identify the most perfect investment sources as well. The investment proposals should be ready at the correct time. Hence, it is always necessary to analyze and evaluate the growing financial market trends and take up the investment decisions accordingly.