3 Tips on Making Better Investments
While investing money a majority of people assume that the investment is going to work for them rather than against them. This usually is the case however it also depends on the understanding a person has of his or her particular investment before they invest, to avoid nasty surprises. Here we will discuss some of the basic DOS and don’ts of investment before you invest.
Tip one:
The first thing that a person needs to keep in mind while making an investment is reading the fine print. It’s not just reading the fine print that count, its understanding it as well, which includes understanding the implications. This is important because financial companies and investment firms never leave themselves vulnerable, if under any circumstances your investments depreciate you need to understand it is you’re part of the investment which is depreciating and not your investment firms.
Losses will be passed on to you first in most cases. So you need to understand the implications of the fine print before you decide on a long-term saving plan regardless of the recommendations you receive from your friends and family.
Tip two:
Charges, it would serve you well to understand exactly how much of your money is being deducted as charges. All investment companies make money from your investments with charges, that’s why your investment money needs to work twice as hard to give you back the basic promised returns; because the charges are deducted first. Consider this, hypothetically if you invest 100 every month for a year at the end of which you a promised to 5% returns, this 5% returns is subject to charges being deducted first; before your money interest is credited to you.
Under any circumstances if the returns are insufficient to cover the charges of the financial institution your 5% return may shrink to a lesser percentage. On the other hand any excess returns are also the property of the financial institution, hypothetically if your hundred returns profits of 25% only 5% of that will be yours. What you want to look for in the fine print is something to the effect of “investments are subject to market risk”. While most sales people will brush this aside as just a formality that needs to be mentioned it is in fact a clearly mentioned statement which protects financial institutions.
Tip three:
To prevent your investment from running into trouble try to find out if your money will be invested in the stock market or other volatile types of investment. The reason this should concern you is because while it is a fact that in the stock exchanges your money could multiply many fold however, your investment firm has promised you a return of so many percent only.
So it’s of no relevance to you whether your money grows by 200% in that particular year in volatile markets because extra profit is not shared with you, however in case of financial mismanagement the investment firm will first deduct is charges before providing you with your returns, which could be less than expected.
So to invest your money safely look for investment options that utilize your money in other less volatile investments, this prevents you from receiving any unwanted surprises. More latest news visit home loans for bad credit people.
Category: Investing
