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.
