There is continual growth of investment options in the marketplace with a varying set of risks. Long or short term will give you changeable degrees of flexibility, the longer the investment you choose, the better the returns tend to be. Some investments come with a guarantee of returns, others don’t. It’s up to the individual to consider all variables; their circumstances, the level of investment and the types of risks they can afford to take, before agreeing on any investment. Although there is a wide range of choice, investment options continue to expand, but the fundamental characteristics remain.
How much risk are you prepared to take; the level of risk will ultimately dictate the size of the return. However, can you afford to risk your investment or is it guaranteed? Are you investing directly into an asset or the performance of a company?
Some investments are income generating, paying dividends monthly or quarterly, for some this allows them to re-invest or subsidise living costs. It’s always a good place to start by comparing how much you are currently receiving before you look to redirect the funds elsewhere.
As an opposite to the above, this is where the investment grows in value, fueled by demand in the market or by negotiating a below market value, again you can compare this to long term investments through Banks, Pensions, SIPPS.
This is a very important part of investing, and for most, is the deciding factor. On paper any investment can look good, but the reality is, unless there is a strong exit strategy the returns may never be realised in the time scale desired.
Investigate the market and decide whether you can see the opportunity for investment. Ask other investors whether it’s working for them and how much growth they’ve seen since they invested.
Higher returns can normally be found in new investment vehicles that are rapidly growing, or where new advances have been made, but this sometimes requires knowledge of a certain industry. By staying open minded on the area of investment you will find opportunities previously overlooked.
Understand how your money is currently working for you, speak to other investors, narrow down the type of investment, decide between short, long or medium term, do you want capital growth or income generating returns.
Then, start looking at the companies you would like to deal with, are they qualified to give you advice, have they conducted their own due-diligence into the investment, what level of service do they offer, do they have a range of investments to choose from.