You have money to invest and you are wondering what is a good investment? What are safe investments? After all you would like to make a better return than on a CD at the bank but you do not want to lose all of your hard earned money on something stupid! You are looking for investment management advice. Someone who manages investment portfolios can give you investment management advice, for a fee. And you can read books about investing to get investment management advice. Here are a few thoughts about finding and following investment management advice, starting with a few caveats:
- There is no free lunch
- You always need to do your own homework
- Beware are too-good-to-be-true tips
- The past does not always accurately predict the future
- Unless you know what to look for
- And, Rothschild was probably right about investing
Blood in the Streets
First of all let us dispense with the old saying attributed to Baron Rothschild. He is credited with saying that the best time to invest is when there is blood in the streets, even your own. That is to say when things are at their worst everyone has lost faith in the markets and cashes out. That is, according to the investment management advice of an old market expert, when and how to make a lot of money. But how do you pick the most promising investment when everything has just gone to heck in a hand basket? The point is that you make money investing by learning and practicing the basics, day after day, month after month and year after year.
The computer age has made investing easier. You do not need to beg for advice from a stock broker or someone who charges for investment management advice. You can screen for stocks with a variety of criteria in search of good investments. The point of investing is to find a stock, piece of real estate or other business opportunity that will make money into the distant future. Future income discounted to current price is called intrinsic value and is the basis of fundamental analysis of stocks and can be applied to other investments. Famous investors like Warren Buffett state that they do not invest in companies unless they understand the business plan of the company and how that business plan will make money now and in the future. You can screen for stocks in the tech sector, bio tech, aerospace, oil exploration and more. You can look for stocks with a low price to earnings ratio which is commonly a measure of an underpriced, bargain stock. If you know what the company does to make money and believe that it is underpriced you buy it with the expectation that the investment will be profitable in the future both because the stock price will go up but also because the company will likely pay dividends as well.
Sound investment management advice also includes how to reduce risk. Many investors do this by diversifying their investment portfolio. US Treasuries are backed by the full faith of the US Government and are a benchmark for long term investing. Having a portion of your investments in US Treasuries protects you against catastrophic market changes. And, there are stocks out there, like the next Microsoft, which will grow two thousand fold after they go public. Scouting out start ups, learning what they do and putting a portion of your portfolio in growth stocks gives you a chance at incredible growth. And, knowing your investments and what you would buy if prices fell gets you ready to take advantage of the occasional blood in the streets scenario.
Paying for Investment Management Advice
You can certainly pay someone to manage your money. Demand to see performance records and remember that if their results seem too good to be true, they probably are just that, too good to be true. And remember that you will need to give away part of your earnings every year to someone that might just do exactly as you would if you pay someone to manage your investments.