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Investments Guide
By: Mansi Aggarwal
Investment requires prudence. Whether the amount is small or big, you need to
have complete information about the place or field where you are going to invest
it. Investment is most often made with a purpose to accrue good returns in
future. Investment is like a source of income where initially you put in some
capital and expect it to multiply or boom in the near future. There are various
types of investments nowadays and different strategies are associated with them.
Investment can be in the field of property, land etc., in the stock market, in
bank in the form of fixed deposits, in trusts and insurance policies.
• When you move out to invest say for instance in property, the strategy of buy
for low and sale for high prevails. In the language of investment this is called
the ‘arbitrage’. What you require first of all is a perfect idea of the
fluctuating market. When the market value is low, make as many purchases as
possible. When the market as you assessed picks up pace, sell whatever you
purchased at simply double the price. This profit however is not possible
without a vigilant study of the market. An investor who has scrutinized the
market from top to bottom predicts the highs and lows of market and makes
purchases much before the onset of the profit season.
Arbitrageurs are very smart nowadays. In order to incur huge benefits, they even
go about purchasing some very archaic piece of furniture or property from a low
price market, invest a few more bucks in its renovation and then sell it in an
expensive market or put it up at auction on the internet.
There are times when massive investments are being made in one area, this is
known as the ‘market bubble’. Take for example, if a piece of land in a specific
area is inviting too many buyers and that too with unbeatable profit, there is a
horde of investors to purchase land in that area and sell it for the maximum
possible. Similar is the case with the stocks of a company that is giving
brilliant dividends to its stock holders, if the company lowers even a single
dollar on its stock, multitude of people gratify their desire to receive
excellent gains later.
• Related to this is the ‘value investment’. Here the investor estimates the
value of the company in the form of its returns. If a company has a good record
with its shareholders and its shares are relatively at a lower price in the
market, the investor will purchase maximum shares as possible since he is
confident of the company’s value. The investors basically peep through what is
visible in this case. Many companies only flaunt to be successful in the market
but actually they have been charged with many illicit proceedings. While there
are companies that make a slow and simple start and scale new heights gradually.
The investors are in search of these types of companies, the ones that are not
feigning to be great.
An insight into the actual situation of the company prompts the investor to make
judicious investments.
• The risk factor is always lurking behind these investments. It could be a case
that the buy low and sell high strategy does not work, that the market does not
soar high as forecasted. In this case huge losses can meet your investments. It
can also be a possibility that the stocks of the company that is deemed to be
performing well, do not meet the expected surge in price or that the company
rather than progressing starts retreating. So, the risks cannot be ignored at
any cost and it is also a fact that the long term predictions about the market,
company etc. might turn out to be true, short term ups and downs are reasonably
difficult to foretell. So the financial advisors mostly speak the lingo of long
term investments so as to ignore the short term impediments.
• It is advised to take guidance from a good financial advisor before making any
investment. For a colossal loss in investment is potent enough to ruin the
entire life of the investor.
About the Author:
Mansi gupta writes about investments. Learn more at http://www.investingdiscussion.com . |
