It means, first of all, correctly to specify methods and the purposes of investments, investment horizon, your relation to risk and kinds of investments.
The investment purposes can be different. Someone would like to save up for a secure old age. Someone for children’s education and grandsons. Someone for house purchasing.
Investment term is meant investment horizon, but, anyway, it shouldn’t be less than a year and it is better to do for 3-5 and more years. Long-term investments allow receiving bigger income. It is better to invest $1000 for 10 years, than $10000 for 1 year.
Your relation to risk is how you personally concern time procorfs of your capital during term of investments. For example, you are the student investing $1000, and at any stage your capital can decrease considerably, and, naturally, you can begin to panic. Well and if you the specialist with annual earnings in $60 000, time reduction of invested capital ($1000) most likely doesn’t cause in you rough emotions.
Possible profitableness of investments directly depends on methods and kinds of investments, your relation to risk and investment horizon.
Investment methods it is like the deposit in bank, mutual funds and independent investment. Each method has pluses and minuses. The deposit in bank allows keeping only your money from inflation, profitableness under the deposit is approximately equal to a rate of inflation. Investments into mutual funds, as a rule, give not so high income (10-12 annual and don’t demand the big knowledge and time for management. Independent investment demands, first of all, profound knowledge and time, but also gives higher income – 30-50 % annual.
Kinds of investments are that, in what you will invest: bonds, real estate, indexes, shares, options and futures.
To choose a method and a kind of investments, you should solve for yourselves some questions. Whether I want to manage the investments? Whether there is some knowledge for management of investments? Whether there is time for management of investments?
Tip for those who decided to invest:
1. It is necessary to begin with very small sums that the payment for errors was not so big. And errors first will be, as well as in any new business. The one who doesn’t work isn’t mistaken. In a choice of methods and investment kinds it is necessary to move from simple to difficult. As well as in any business, it is necessary to accumulate knowledge independently and gradually.
2. Better in all to understand most then it is possible to estimate correctly risks and to generate the balanced portfolio of investments.
Some statistics
If you in 1987 purchased on $10 000 shares of company MICROSOFT (MSFT) today you would receive more than 1million 700 thousand $USD, or 30 % annual.
If you in 1987 purchased on $10 000 shares of company HOME DEPOT INC (HD) today you would receive more than 900 thousand $USD, or 25 % annual.
If you in 1987 purchased $10 000 shares of company INTEL CORP (INTC) today you would receive more than 450 thousand $USD, or 21 % annual.
It is very reasonable that government, despite this recession is not abandoning to assist small businesses. And small business grants can be a true helper today.
But, of course, you should understand that today the fight for small business grants as well as for other kinds of grants is harsher. This is logical – more businesses need them. So before you start your battle for the small business grants, please check out this blog for more helpful tips about grant industry.