What are the four main ways to invest?
In the investment markets there are four main categories of investments:
Cash investment is typically the most liquid of the investment strategies. You stash cash into a savings account that yields an interest return in return for your money being held at the financial institution.
2. Fixed interest
A fixed interest is similar to a cash investment, however tends to be less liquid. For example, you can purchase government or corporation bonds. These tend to offer a higher interest rate than a cash account in return for a commitment of a term on the money.
A shares investment is simply the purchasing of an interest of a company. Each share you purchase signifies a single unit of ownership, the percentage of which is dictated by the total amount of shares available.
In Real Estate, there are many ways to invest. Most typically however, we are talking about physical assets including:
- Residential property including houses and units
- Commercial property including individual offices or office blocks
- Retail premises including shops
- Hotel rooms or hotels
- Industrial property including warehouses
5 Steps to real estate investments
Step 1: Talk to a financial planner and accountant
Talking to a financial planner and an accountant will set you up to decide how you want to start. It also ensures you take taxation into account before you get started. The number one expense for investors is taxes. If you have this in mind when you start, it may help you side step some taxation landmines.
Step 2: Become a student.
It bewilders me every time I have a new investor who is just winging it. Hoping to strike lucky isn’t a strategy that I would count on. It is easy to find investors. Become a sponge, pay close attention to their failures. They are more important than their successes.
Step 3: Start hunting.
Hunting is the exact right word. You need to be strategic about your search. Any good hunter knows opportunities to make a trophy shot are rare and should be taken when given the chance. That being said however, you should be keen to watch for smaller victories. They are more frequent and are more apt to keep you primed and ready for the big chance shots.
Step 4: Take the shot.
When you see the opportunity, take the shot. It may not be available to you the next time you look. If you make an informed and well educated decision, you will have planned for the times that things go wrong. Don’t hesitate too long.
Step 5: Reevaluate your portfolio annually.
Keep a close eye on your investments. Be sure to strategize what to do if you have an under performing investment as well as when you have an overheated investment, both can be distracting and may derail your investment portfolio.
Investing is akin to a war. You may not win every battle, but with a sound strategy and consistent education you will begin to see opportunities everywhere. It’s important to be flexible with your approach but still focused.
Knowing how your strategy is vital, because it’s important that you know things too.