What is the Best Investment for My Money?

September 5, 2010 Investing/Trading, Stock Investing

What is the best investment for my money? If that is not the question an investor is asking then it should be. Asking what is the best investment for my money leads the investor to develop criteria by which to judge the success of investments. Asset growth, security of assets, opportunity for large gains, and more are good criteria for judging investments. What is the best investment for my money may have different practical answers based upon the age of the investor and general financial circumstances. It is the general consensus of investment advisors that the degree of risk in ones portfolio of investments should decrease over the years and as retirement approaches. Portfolio diversification is important but the first and best investment is probably a place to live. Before investing in gold, investing in Russia and its oil resources, or investing in growing companies in Asia or Latin America the investor needs a solid base and that comes from home (or apartment or condo) ownership.

The other important factor when asking what is the best investment for my money is not to be carrying a huge load of debt. It takes an aggressive stock portfolio to beat credit card interest every year. Pay off credit card debt before thinking of picking new winners in the stock market. Best investments are a typically a combination of growth and security. But there are also excellent short term investments that will pay excellent returns in capital gains but should perhaps be avoided over the long term.

So, we have issued all of the caveats and disclaimers? Now, what is the best investment for my money? Look for hidden value and growth potential in long term stock ownership and look for volatility for short term investing and trading. The buy and hold investor will want a margin of safety in a stock and the short term investor will want to catch a jump in stock price related to a takeover bid. Fundamental analysis of stocks is the tool for long term results. Technical analysis is the tool of the short term investor and trader. Both ways can make money. To a degree the best route will depend upon the amount of time a person can devote to investing and watching over investments. Success in investing also has to do with the ability to take advantage of opportunity.

There are times when the question should be changed. “What is the best investment for my money” should be “Where is the best investment opportunity at this time?” We live in an era of significant scientific discovery in biotechnology. The human genome has been mapped and new medications are being invented every day. For the person with the knowledge or willingness to obtain it investing in small startup companies in biotech can be very profitable. We are also living through the second worst recession in a century where debt and growth are daily issues in the market. There is tremendous volatility in stock prices and those who know a stock well and are able to buy and sell at the right times will profit greatly. So, the point is that finding the best investment for one’s money has to do with looking around. Finding opportunity and exploiting it. Sticking with stocks that you know in sectors that you know is a good place to start. Learning the fundamentals of anything you buy or trade is also essential to make the best investment for your money.