In a simple word, investment is ownership. If you have an investment in a business or a corporation, you own a portion of the organization through your investment. You have contributed money to the growth of the company, and you want to make a return on your investment. What investments should you choose? If you want to make a profit, you will have to know what markets to examine and invest.
Trending markets include the Forex Market, the NASDAQ, the Dow Jones, the Asian Market, and the Japanese stock market, the Nikkei 225. These markets offer a plethora of investment opportunities. Information and knowledge help you understand which investment to make. Part of this strategy includes gathering data from reputable sources where you can build a bank of education toward a specific industry, market, or stock. Good investment begins with complete information.
Once you have the information, you must realize the risk of investment. Nothing good comes without the possibility of falling behind and investing is no stranger to the element of risk. Risk is defined as: the chance an outcome of an investment will differ from the expected outcome. The risk is calculated using the standard deviation of historical returns of an investment. You, as a possible investor, are not expected to do the calculation of risk, but it may behoove you to do the proper research on the investment opportunity to obtain the proper level of knowledge and risk assessment.
An investment is considered trending when it goes toward a specific direction for a measurable amount of time. The five top trending investments are low-risk investments with high returns. They include:
- High-interest savings
- Certificate of Deposit
- Treasury Inflation Protected Securities
- Money Markets
•High-interest savings is essentially risk-free. You simply place your money in a savings account with a high-interest rate. You will need to do nothing further besides keeping your money in the bank. High-interest savings accounts offer competitive rates, and they charge no fees.
•Certificate of deposit is a pretty vanilla form of investing. It’s nothing like the movies “Wall Street” or “Boiler Room.” A certificate of deposit (CD), you will deposit your funds for a specific length of time with the assurance there will be a positive return on your deposit after the amount of time has passed. There is virtually no risk because even if interest rates change, you will still receive a positive return. The only risk comes from you, the investor. Some terms are 5 to 10 years, and you will need to prepare for that length of time. If you withdraw early, there are usually penalties in the form of money deducted from your balance.
•Annuities are trending because people want to invest in something stable for the long term. The investment vehicle of annuities falls into a category of time consumption investment; it’s nothing short-term, and you must be prepared for time to pass to make any return on your annuity. It is critical to understand how to manage your annuity profile and when to change the investment contribution type.
•There are different types of annuities:
Fixed annuities are just how the sound: they have a fixed return; thus, they are the lowest risk investment for annuities. Variable annuities run the risk in return on investment being different than expected because the rate is variable and subject to change. Equity index annuity is based on the market will change as the market changes. For an equity index annuity, the more volatile the market, the less the chance of making a positive return.
The benefits of annuities include higher returns yet with a potential chance of higher return comes the possibility of loss as well. Basing a profit on the performance of the stock market always contains a considerable amount of risk.
Treasury Inflated Protected Securities is one of the lowest risk investments one can make in the world of finance. There are two paths of making money from Treasury Inflated Protected Services (TIPS):
Fixed interest rate which does not change during the life of the bond
Built-in inflation protection that has a guarantee from the government
TIPS are protected from nearly all fluctuation in the markets and interest rates. Therefore, TIPS are low risk, but also low return.
Money market funds are created to avoid losing the principal of the investment. With a money market, interest is paid out to the investor in the form of dividends. The goal of any money market fund is to keep a net asset value of $1 per share. With money market accounts, the benefits include low risk, but the returns are low as well.
Investing is an important part of any financial strategy. It represents ownership and progression toward increasing the amount invested. The key to investing is knowledge and information, and a good strategy begins with forthright and proper research.