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Three Solid Ways To Invest Your Capital

Feb 25, 2008
An investment should have the sole objective of getting a return on the capital invested by the investor within a stipulated period of time. As an investor your aim should always be to get the highest possible returns within the shortest possible time. Only then you can gross the maximum compounder each year and make full use of your capital.

One of the major factors that you should keep in mind while investing is the risk involved. The ideal investment is the one with no risk. But like most ideal things, investments with zero risks do not exist. So you should be looking towards achieving the largest compounder with the minimum risk while investing.

The risk factor is tied up with your control over your capital. The minute you hand over the control of your money, the risk factor jumps up. Though the stock market is an effective way to earn high returns in a short time, the stakes are sky high, because all you get in return of your investment is a receipt, which becomes a worthless piece of paper if the market crashes. Your money is being handled by other people, and you do not get any material good or service in exchange.

Keeping that in mind, a bank is your safest investment option, even though it is not completely devoid of risk, it is a business whose solvency and trustworthiness is vouched for by the government. But its no use investing a capital of less than million dollars in the bank, for the returns would be ridiculously small and would not be enough to make ends meet. For a lump sum investment however, the bank is your safest bet.

The second best option would be real estate. Investment property is always less risky than investment in mutual funds or shares, because of two reasons. First, the control over your capital is absolute. Secondly, what you receive in exchange for capital is real and tangible. However the drawbacks of real estate is that it requires a very large amount of capital, in addition to the cost of property other fees, mainly legal, have to be paid, taxes on transfer of real estate are also high.

Last, if you do not have enough capital to buy real estate, or to get an interest rate from banks high enough to live by, then the best way for you would be investment in goods which are less expensive than real estate. Goods that are common, within your budget and in demand. If you can buy such goods which are under priced and then add a mark up to it and sell it for a higher price, your profit margin is absolute, and you get a high return on your capital. For example, say you buy a good at $100 and then sell it for $140; you have a forty per cent clean profit. Such transactions are hassle free, and not time consuming; it can happen within seven days or less. And with such a high profit margin you can earn a million if you are able to sustain this pattern and repeat it about 28 times. These investments have very rapid effects on the capital, and in fact have far reaching influence on your entire port folio. And since you retain control over the good, and it is a tangible good, the risk involved is also much less.
About the Author
Mark Plummer is a UK based independent Offshore Investment advisor.Has been involved in the financial services and financial planning business since leaving full time education.Before you decide where you want to invest your money please visit this Investment Fund
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