The strategy and timing with which one invests are key to the success of that investment. With so many factors affecting the strength of an investment, it can be difficult to make judgements about when and where to put your money.
Here, we look at four things to consider for when looking to make an investment.
The one key to making wise decisions when it comes to deciding on a company in which to invest is research. As well as understanding what you stand to gain from making a steady investment, you should be monitoring the company for some time with a view to understanding the risk involved in an investment.
Strategies for investment vary, which means it is difficult to objectively determine how suitable any one company is for investment. Rather, it is best for an investor to have a clear idea of their strategy and to relate information about any given company to their own set of criteria.
Timing is key to the success of any investment. This relates to both the investor and the company. Generally speaking, the most solid investments will be in stable and well established companies. However, investment in up and coming businesses can be among the most profitable. When investing in a little known company, timing can mean the difference between success and failure.
Conversely, your readiness to invest is directly related to your own financial situation. Having money tied up elsewhere is generally a sign that investment might not be a good idea at this time.
When looking at investment, investors should be clear about when any tied up funds will become available to them.
Worth considering are businesses involved in the government’s ‘Enterprise Investment Scheme’ (EIS). The list of EIS companies comprises a number of small to medium sized outfits looking for investment, all of which are, for various reasons, may be considered high risk.
In order to encourage investment in such companies, the government’s scheme offers investors a wide range of tax benefits, all of which offer the investor a considerable financial return. These incentives include an abolished capital gains tax, an abolished inheritance tax and reduced income tax, more information on the benefits of EIS here. Needless to say, the number of people exploiting these tax breaks is considerable.
Only certain companies fit into the scheme and investors must meet a number of criteria before becoming eligible for these tax breaks. The finer workings of the scheme are readily available on a number of government websites.
Consider Not Going Alone
It can often be more beneficial to the investor to make a larger investment in a company but doing so can, of course, be costly. A great way to make strong investments can be to join a group of people you trust and to make an investment together.
Not only does this reduce the risk to yourself but it can help increase the power of your investment and can see a larger return on your money.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.