Stashing money under the mattress in an inflationary economy is a guaranteed loss. Would you dispute that with me? probably not. But then how would you know which investment will be particularly beneficial to you? When I say beneficial, I don't mean just absolute returns, but I also mean the convenience of earning returns, the stress level one has to take to attain that returns, the whole nine yards ..
I finished reading the book, "The Income Stream" by Bob Goodman. Its a good book and I recommend it to any one interested in real estate investment. One of the important (not related to just real estate) topic I would like to make a note of, is the following consideration before making any investment.
When you are in the market place to invest your money, either in stocks or bonds or gold or real estate or annuity or land or CD, here are the six significant criteria that need to be considered:
The Significant Six:
- Risk – How safe is my principal?
- Liquidity – How quickly can I convert into cash?
- Tax Consequences – How much will Uncle Sam take?
- Growth Potential – Will the value of the investment grow and keep up with, or exceed, inflation?
- Yield Factors – Is this the highest possible return I can get and will it compensate for all of the above?
- Management – How much time and effort do I need to spend on behalf of this investment?
All these factors should be carefully considered before investing in any situation. As an individual you should decide if the rewards will justify the risks in any investment. Another alternative is to pursue the path of Investment Diversification – balancing the investment portfolio into some high risk investments and some into low risk investments. This can be a wise and good principle of investing.
-Nidhi
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