Tuesday, April 23, 2013

How To Get Rich - Search For Good Investments

Do you know a good investment when you see it ?

Can you tell if what the promoter is saying is actually true ?

If you answered no then you had better read on !


The Good The Bad And The Ugly


All investments basically fall into one of the above categories. Good investments are ones that have a proven track record of increasing income and growth for their investors. Ideally, they pay out income either monthly or quarterly. They are also very easy to buy and sell if your plans should change or the investment starts to struggle. I call it the easy in and easy out principle, others call it liquid.

Bad investments are ones that have not yet proven their value to the investor. They generally do not pay out a regular income and the value of their shares fluctuate wildly for a multitude of reasons. They are sometimes promoted heavily by brokers and others in the industry. They are quite often new companies with new products that are promoted to revolutionize the world. They play on investors emotions and lead you to believe there are big profits ahead.

The truly ugly investments are ones that have all the qualities of the bad ones above in addition to a few more restrictions for the investor. They are generally very easy to invest in but almost impossible to get out of in a hurry. The most common of these types are Real Estate Limited Partnerships. Many generally have no history of making any money at all and to sell your shares you have to find someone else yourself who is willing to buy. A very difficult if not impossible task if it is truly a bad investment. They are promoted heavily and show wonderful projections of profit, but they are just that, projections.


Separate and Filter 


Before investing your hard earned money, you must determine which category your investment options fit in to. Needless to say you will want to invest solely in the good investments and stay far away from the others.

Ugly investments are relatively easy to spot by using the easy in and easy out principle. Always know how to get out of something before you look at getting in. Simple but often overlooked in the excitement of the hype.

Investments that fit into the bad category can sometimes turn into good investments. However, it is very difficult to know which ones someday will. If you are able to pick these right, big money can be made. With the bigger potential gain also comes higher risk of your invested capital. Not generally the ones to use for your core investments.


Learn Before You Yearn


By following the above guidelines you will eliminate most potential investments from your search. You will then be able to learn all that you can about the ones that are left. From these remaining good ones you will be able to research which ones will be best suited for your future wealth building efforts.

Remember, your goal in investing is to make money, not lose money. A losing investment early in your investing career can seriously erode or even destroy your confidence and your motivation to become wealthy could be seriously damaged.

Start with the good and learn all you can before you yearn for a better life.

As always, I welcome you comments and suggestions for future topics.

7 comments:

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Anonymous said...

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Anonymous said...

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Discovering excellent businesses is just one part of the equation.
The other part is discovering the right price to pay,
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Anonymous said...

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Anonymous said...

Do not look at investing in the stock market as a hobby. It is something that has a lot of risk involved and it
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patience to take it seriously, then you should not
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