Investment Choices – Which Ones are the Best?

This article is not about specific investments to own in your portfolio, but rather some general recommendations on what classes of investments are worthy to be considered as investment avenues.

Beginning your own company.  Risk = high.  Reward = high.  This method of investing presents a lot of ‘sweat equity’ on your part, because you are the catalyst to making sure that the business is viable and is making enough money to sustain itself and move forward by providing profits on a regular basis.

There is a lot of interest right now in starting a home-based business because of the economy and people who are looking for additional income opportunities.  Fortunately, because of the Internet, there are a lot of good sources of information on home-based businesses.  But there are a lot of very bad offers, too.  Be sure to check out as much information as you can on an opportunity before you sign up and pay money.  Remember that quick decisions are often those that later are regretted.

Purchasing stocks.  Risk = medium to high.  Reward = high.  Playing the stock market on your own is risky if you do not know what you are doing.  You can lose a lot of money in a very short period of time.  But, in the hands of a competent stock broker, you can make good money even though you are paying fees for their services.

It is especially good to get advice from a professional during times of economic upheaval.  They can provide solid advice and do so from a factual point of view instead of an emotional one.  A good mutual fund company can help you be more successful as well at purchasing the right stocks in the right amounts.

Purchasing bonds.  Risk = low.  Reward = medium.  Bonds have traditionally been the yin to the stock’s yang.  More solid in terms of risk, but only returning a medium reward.  Bonds are a safe harbor for your investment dollars and offer some of the best returns of those investments in the low risk class.

Cash equivalents.  Risk = low.  Reward = low.  Using financial vehicles such as Certificates of Deposit and Money Market Accounts are safe and sound investments.  So, the rewards are low, also.  The other advantage of these accounts is in their liquidity.  You can get to your money easily when needed.

Alternative assets.  Risk = low.  Reward = low to medium.  These are the more physical assets like land and houses.  But they also can be hedge funds or private equity as well.

Using the classes of investments above you can see that not all of these are appropriate for everyone.  Look into them individually and seek the advice of a professional before you invest.  Be sure to read any prospectus carefully before you invest.  Good luck.