Tired of hearing “It’s a good investment” from your co-worker asking you to invest in his nephew’s emu farm? You’re not the only one.
Most people have a general sense of what a safe investment might be, but what really is a good investment?
A good investment is one that helps you diversify your portfolio and earn interest over time. You’ll learn to spot these opportunities.
Bad investments tend to be a little more obvious, but you can still make a mistake if you’re not careful. Keep reading to learn how to tell a good investment from a risky one.
Red Flag: The Prospective Investment Claims Fast Returns
If you’re investing in a business that is promising fast returns, hold up. Investing is not something that will earn you a huge profit margin in a short amount of time. One of the major benefits of quality investments is that they earn a reasonable amount of money continuously over decades.
Someone asking for your investment that is promising to get you your money back ASAP likely is desperate for your investment — and there’s most likely not a great reason for that.
Green Flag: The Investment Is Forward-Thinking
When choosing good companies or good stocks to invest in, think about the future. You will be making money off these investments in that future, so you will want to pick companies to invest in that will remain successful.
Even better, try to seek out companies that will grow into the future. Those who invested in renewable energy fifteen years ago are now reaping the rewards as the general public turns toward wind and solar. Make similar smart decisions as a favor to your future self.
Red Flag: You’re Going into Debt to Buy In
No investment is so rare, special, or valuable that you should go into debt to invest in it. There are times when it may make sense to use borrowed money to buy stocks, but make sure you have a grasp on these unusual circumstances before doing so.
Green Flag: The Investment Lines up with Your Goals
When you choose to invest in something, think about your main goals in investing. Your goals are likely framed like, “I want to earn X amount of dollars in Y amount of years.”
Does this investment align with that? Does it seem like it will be profitable fast enough to be useful to you in reaching your goals?
Even if something will be a good investment someday, you have to be realistic about whether it’s one of the good stocks to invest in now. If not, leave it on the table for someone who plans to be in the game longer.
Red Flag: The Investment Comes with a Lot of Risks
These include things like venture capital trusts, spread betting, and land banking. The outcomes in these settings are so uncertain that investing high value into them could be disastrous.
How to Find a Good Investment
There are plenty of good investments out there if you know where to look. You can get started investing in a successful industry and set up a passive income for years to come.
Now that you know how to find a good investment, get in touch with Passive Storage Investing to learn more.