Investing , How To Choose The Best Option ?

Investors are constrained to choose from a multitude of investment options. They must also give contradictory advice on achieving their financial objectives, and how to invest the savings they have accumulated throughout their lives. When you consider that more than 7000 mutual funds and thousands of insurance products are available in the United States alone and the world, the choice that will satisfy them is daunting.

Not surprisingly, people often ask the general question: what is the best investment? The first part of the reply is simple: In all circumstances, no single investment is ‘the best for all investors. The personal circumstances, objectives and needs of different people vary, as do other investments. Secondly, in some cases, the strength of one asset class could be the weakness of another. The relevant criteria must therefore compare the investment. The art is to find the suitable investment for every goal and requirement.

The main criteria are as follows:

The purpose of the investment is to manage the liquidity required by the investor to tax the asset until the final, but not least, cost of the financial program is reached.

The Golden One

Objectives determine the features of an investment. You can only choose the most suitable investment if you have decided on your short-, medium- and long-term objectives. In general, the following general purposes are:

Fund for Emergencies

When necessary, money from the emergency fund should be readily available, and its value should be equivalent to approximately six months of revenues. For this purpose, money market funds are excellent. Although these funds are not much higher than inflation, their advantage is that capital is saved and readily available.

If you have a ready emergency fund covering more than six months of revenue, a more aggressive mutual fund could be considered.

Growth of capital

If the primary objective is to achieve capital growth, the actual return rate should be higher than inflation. This implies a greater short-term risk to capital. Capital growth investors should not be apprehensive because they will reap the benefits in the long run.

The history of equity prices over the past 100 years shows the best performer, followed by property, of equity investments. This does not mean that you should blindfold either of these investments. Wait until you are interested in the quality shares at reasonable prices.

TAXABILITY

The taxability of investments has a significant impact on their value to the investor. The recovery after tax has been deducted should be used to compare returns on different assets. The investor should always ask what remains in his tax deduction pocket.

PERIOD

With no high return potential, conservative investment is suitable for shorter periods, while long-term investment targets aim for higher returns. Money market funds are ideal for one or two-year periods. Flexible asset allocation funds, commercial owned funds and value equity funds may be selected for more extended periods, dependent on the economic and interest cycles and the investment’s risk-acceptation propensity.

COSTS Investment costs are usually administrative costs and commissions. The percentage of investment costs affects the value of the investment directly. Many of the investment products currently available are structured so that investors can negotiate the commission.

CONCLUSION

No investment strategy draft will be perfect for all circumstances. Therefore, investment opportunities should be critically examined before any decision is taken. It should also be borne in mind that various companies manage certain funds under the categories of an investment referred to above. Some are managed more effectively than others. Investors should, therefore, thoroughly investigate investments and managers before investing. Otherwise, professional asset managers could be appointed to do so on their behalf. It is time you invest in your future financial well-being to determine the type of investment you need.