5 Investment Strategies to Avoid in 2014

Investing in nothing at all has few advantages; it certainly can’t help you get ahead financially. However, one of the reasons people put off investing is the fear of losing money. This fear is logical and very sensible – you work hard for your money so you should think carefully before committing to an investment strategy which you feel to be high risk, but how do you tell? Doing something with your money is far better than doing nothing – but how do you choose the right something? Some investment strategies to avoid are listed below.

investment

You work hard for your money so you should think carefully before committing to an investment strategy.

The Sure Thing

Whenever you hear you can’t lose, or it’s completely risk-free regarding an investment, listen for the alarm bells too. You hear the same sort of claims at the race track. Any investment that claims to be a sure thing is, at best, misrepresented and at worst, a scam. No investment returns consistently high yields every year. If the investment doesn’t show any poor returns at all then the sales information may be questionable.

Ostrich Farms

Believe it or not, these are still offered as legitimate investments. The promised returns (in some cases over 200%) are highly suspect. Like any pastoral enterprise, there are risks associated with this type of investment. While ostriches are known to be hardy and long-lived birds they are also prone to pests and disease, just like cows or chickens, and the farms are just as vulnerable to drought and weather damage as any other. Unlike most other farming enterprises however, there is little demand for the product and this, couples with the capital-intensive nature of the investment means the promised returns are unlikely to materialise.

Movies

Investments in film sound glamorous but – contrary to popular Hollywood myth – movies rarely make money. While it has never been cheaper to shoot a film than it is now, the costs of distribution and promotion remain high – and the support of critics and/or the public remains capricious.

Art

Like film investments above, the value of art is highly subjective. Investors who choose art as a wealth creation vehicle are taking a big risk. Should fame in any large measure elude their artist of choice, the money spent on their work will likely never be recouped. If the painter were to die, their work could well increase in value but there is no guarantee of this, or that another investor won’t sell their collection at the same time, thereby flooding the market and reducing returns for everyone concerned. The associated costs of investing in such a high-risk enterprise (storage, insurance, etc.) are also high and will impact any potential return.

Timeshares

Timeshares may be a great way to holiday cheaply but as an investment there is no resale value. They are also quite time intensive. To get the best out of this sort of investment, you will likely be doing a lot of trades. These investments offer no capital growth – you’re unlikely to sell for more than you bought, and it doesn’t deliver any sort of income. It may save you money, as you can holiday less expensively but that’s about all it gives you.

Learning to tell the difference between a sound investment strategy and those you ought to avoid is all about developing your own financial intelligence. For more ways to enhance your knowledge of sound investment strategies, financial planning companies like My Wealth Solutions offer informative blogs. With the right guidance you’ll jettison fear and make the smart money decisions.

What’s the riskiest investment strategy you’ve ever heard? Share your comments below.

The information provided in this article has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Limited (GPS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

Image Credit:Ponsulak – FreeDigitalPhotos.Net

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Investing Wisely: Ways to Allocate the Company’s Money Wisely

The biggest mistakes that business owners can do with their profits is to splurge them away on frivolous things even if they are supposed to be for the company’s use. You do not want to have your money tied up in company equipment or any other inventory that is not bound to translate to income anytime soon. Especially if you are just starting out, you want to be wise in the way you allocate your financial resources. Here are some of the areas that you need to look at in terms of investing wisely:

Revolving Fund – you need to keep enough money as your operational fund. This will include money that you will use for purchasing raw materials, paying for your utility bills, compensating your employees and partners, and any other overhead costs you might have. In bigger companies, money for these expenses is allocated at the start of the fiscal year. Budgets are prepared by the department heads and approved by the executive team and the Board of Directors. The owners, after all, want to be assured that they are investing wisely in the company. Smaller companies can do the same thing, perhaps on a smaller scale if their funds are not sufficient for an entire year’s operations. Having a quarterly budget that is reviewed at the end of period can be workable. The profits achieved for the previous quarter may be reinvested back into the company for the next quarter’s budget.

Contingency Fund – of course, there has to be a provision for emergencies and other necessary expenses that are unbudgeted. Having this fund will provide a safety net for the company so that they will not have to resort to financing options when they run into unplanned expenses. The finance manager of the company, however, should exercise control as to what this fund can be spent on. Going over-budget on some projects should not automatically be a reason to dip into this fund.

Preserving Gains – every investor should be able to recover his investment at some point. While some business owners would think that leaving all their money in the company is a way of investing wisely, this practice exposes their gains to risks. Every business has risks. Business owners will have to take their share of the profits for capital preservation. If they wish, they can leave their share in an account separate from the company’s. When capital infusion is necessary, they can simply reinvest more money.

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Online Investment Options for Enterprising Individuals

Individuals today have the luxury of being able to invest in different instruments through online means. Even small investors can take part in the various financial markets around the world. It does not take millions in any currency to enjoy the same earning potential as billionaires like Donald Trump and Warren Buffet. In fact, these financial gurus actually advise enterprising individuals to save and invest as early as they can. When it comes to investments, time is of the essence. The more time you have, the more opportunities you have for investment earnings. Time also gives you the chance to recover from losses that all investors inevitably encounter. With online investment options, saving and investing becomes more convenient.

online investment

When you speak of online investment opportunities, the most common ideas that come to mind are stock trading and forex trading. It would be hard to miss these since ads and offers for trading platforms are all over the net. These trading platforms allow small investors to trade like the big guys. There are tutorials and online support facilities to help those who are new to trading make their way through the system. Minimal amounts are required as initial investment capital. Opening an account can often be done with as little as about $500 to $1000. There are also stocks and forex pairs that can be bought for a really low price. Of course, the growth potential of these depend on the trader’s strategy.

Since investing money through trading is generally a more aggressive option, you have to be careful with your trading decisions. Deciding on what stocks or currency pairs to buy is not the first thing that you should do. Your first step to trading online should be to determine how much money you are willing to invest and how much risks you are willing to take on your investment. Once you have this information, you can already choose among the different platforms that give you the support that you need.

Day traders would have a need for more intensive trading platforms with charting and signaling tools that can prompt and implement trading orders within minutes or even seconds. There are also trading platforms that are best for long-term investors. While charting and signaling tools are likewise available in these platforms, there rarely is a need to watch currency movements. What would perhaps be necessary for long-term investors would be periodic investment analysis reports or weekly charts. All these might sound too technical for those who do not have any investment background. But, learning about all these things is important to get started on the right path towards becoming profitable in online investment options.

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Stuart Miles – FreeDigitalPhotos.Net

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