What is the Best Investment for Money?
The best investment that you can make is one that you understand. This is the simplest and most important principal to hold as an investor. Never put your money in something that you don't comprehend. Never invest without a coherent strategy. Do not take risks that you can't afford to make. Preserve your capital and look for consistent gains.
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Significance
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Even if you allow professionals to manage your money, either through a broker or fund of some kind, it behooves you to understand exactly what they are doing. If the people managing your money cannot explain to you what they are doing with it and why, then that is indicative of at least two problems: one being that you don't understand what you're doing, and the other being that they don't know how to explain it to you. Regardless of any claims about regular gains, a lack of understanding and consciousness directed towards investing opens you up to catastrophic losses or simply poor gains.
Function
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In this way, the best investment for your money is entirely dependent on the level of consciousness that you are willing to bring to your project. If you do not want to consciously manage your investments, stick to extraordinarily low risk financial strategies. Put money in certificates of deposit, US government bonds and savings accounts. It doesn't insulate you from taxation, but the returns on those are guaranteed, you can't lose your principal, and the profits are often better than many mutual and hedge funds after taxation and fees.
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Effects
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Never rely on the advice of "experts" for investments. It is far too easy to be mislead by charlatans, which the stock market breeds like fungus in a dark, wet place. The only experts that are worth trusting are those that teach you how to become a better investor, those that will cultivate a better understanding of the market, of trading techniques and the economy in general. People that merely spout off stock tips do not teach anyone how to become a better investor. They just make people reliant on them for advice which may or may not turn out to be helpful.
Features
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Anyone can make money on the stock market. A lucky trained monkey can double their money in a single trade. It takes consciousness consistently brought to bear on the market to hold on to that money and to grow it consistently. Match your investments to your level of consciousness. If you find it pleasurable to focus on one particular sector or asset class, then you can afford to make riskier investments in that area, as you will be able to quantify and comprehend those risks far better. In areas that you do not have much understanding, reduce your risk exposure.
Benefits
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This approach to investing requires good character. It requires self-honesty, the courage to admit ignorance or to acknowledge ones' own areas of expertise. Money managers cannot make up for a deficit in financial understanding. Naturally, you can put faith in fund managers and cheery prospectus releases, but that is mostly asking for trouble. Match your investments to your level of knowledge and commitment to following them, and you will realize greater profits and feel a greater level of control over your financial future.
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Resources
- Photo Credit Nick Boalch, Flickr
