Investors Weigh Risk And Reward To Achieve Investing Goals

The investment community is full of investing opportunities. Some of the available investments are more appealing than others, as decided upon by an established set of risks and rewards. Based on these risks and rewards, investors will decide which options fit into their portfolio and best helps them achieve their investing goals. Regardless of the opportunity, expect that experienced investors will heavily scrutinize the benefits and dangers of each individual option.

There are a number of factors that help investment seekers determine the amount of risk associated with an investment opportunity. Some of these include the company’s brand reputation and value, as well as established performance and potential for future industry growth. If an investor is satisfied with the corporate outlook, the risk may be considered acceptable. If there are aspects that are troublesome, or are cause for worry, investors would be wise to discount and avoid those investing options.

An investment’s return on investment (ROI) plays a vital role in the investor’s portfolio performance. The investment reward is important, in that investors rely upon it to move them closer to their financial goals. Moreover, an investment’s reward is sometimes used in determining the risk of investing. When returns are high, some investors have an increased tolerance for risk. This is why options are best studied and reviewed on an individual basis.

It is undeniable the influence that risk and reward has on investment seekers’ decisions when choosing investments to add to their portfolio. By carefully following their investing road map, investors will be able to identify investments that move them forward toward building personal wealth, all the while maintaining an acceptable level of risk in their portfolio. In some instances, this will require that investors exercise self-discipline and carefully weigh risk and reward before making the decision to invest.

Three Things To Consider When Choosing Your Investments

Three things to consider when choosing investments for your portfolio are:

  1. industry or sector,
  2. tolerance for risk, and
  3. rate of return.

In most instances, the information you collect researching these factors will provide answers to important questions, as well as help you make important investment decisions. Given the attention they deserve, these factors will influence your choices and give your investing strategy the direction it needs.

Industry or Sector

Based upon global and domestic economic performance, select an industry to invest in that has demonstrated prosperity and potential for future growth. For example, in times of conflict and war, defense and military-related corporations often enjoy a rise in profits. As well, the international container shipping industry – which is responsible for transporting more than ninety percent of the world’s goods – offers a number of opportunities to invest in too.

Tolerance For Risk

The amount of risk you can tolerate dictates and limits the investing options you have. Unless you are a seasoned, affluent investor, investments that are subject to market volatility, as well as financial and economic uncertainty should be avoided. Instead, focus your attention on investment that offer regular dividends or a residual income.

Rate of Return

Although everyone is in search of a “great” return, everyone’s definition of “great” is likely to be a little different. Sure for some it will be high rates of return, but for others it may be smaller, more consistent monthly returns. It is ok to be enthusiastic about investing, but do not let your decisions be influenced by greed.

Your Introspective

Making choices about what type of investments to pursue is the first challenge you will face as a novice investor, particularly if you choose to not rely on an investment adviser or money manager. Carefully consider the factors outlined above for an introspective that reveals your best investing options when choosing investments.

Interviews, Books, and Testimonials Offer Investment Insight

As private investors, we do not have access to the insightful information that institutional investors do. So, when we look for new investments to add to our investment portfolio, we must conduct our own research to make good, educated investing decisions. For myself, this includes watching interviews, reading published books and memoirs, as well as perusing investor testimonials and reviews.

Taking the time to watch or read an interview done with a world renown investor, like Warren Buffet for example, can deliver valuable insight, that was collected from years of investing experience. I am in favor of interviews because of the freedom each participant has to engage in a deep, detailed conversation. This intimate environment makes the exchange of information easier to communicate and easier to receive; thus, much more valuable.

The trouble I see with interviews is that they are short, often only a few minutes. Thus, there is not always a great deal to process and apply to your investment portfolio. On the other hand, published books and memoirs offer several chapters of first-hand accounts and experiences. These valuable resources can be used to learn and apply tried and proven strategies for successful investing. This is because they are offered as a personal perspective and interpretation.

Reading an investor’s review can provide more detailed information about a specific investment opportunity. In most instances, the information found in communities, forums, and blog comments is shared by people with different motives. Therefore the “lessons learned” should be subject to intense scrutiny. To be valuable, it is important that the moderator allow the audience’s comments to encourage constructive debate and not mislead visitors with fake news or a fake review.

Every investor will have their own approach to researching investment opportunities and building their investment portfolio. The resources I recommended have given me the confidence I needed to make intelligent investing decisions. I invite you to include parts of my research strategy into parts of your own.

Use Past, Present And Future To Build An Investing Portfolio

When building an investment portfolio it is important to use credible information from the past, present, and the future, to influence your investing strategy and help you choose your holdings. Learn from other investors’ mistakes, take note of what is currently working well for the investment community, and research what industries will be thriving in the future. Doing so will provide an educated outlook on investment options, and bring about profitable opportunities for investing.

Looking at the past performance of markets, industries, and businesses provides valuable, historic information from which to base a decision to invest upon. Investors can use this data to identify investments that have proven in the past that they can perform in volatile and uncertain markets. These well-established assets are often relied upon to provide the foundation for a well thought-out and well-constructed portfolio.

With new businesses being built and IPOs being introduced every day, investors are finding that a wide variety of investing options are emerging around the world. Across many industries and regions, innovation is presently fueling opportunities for investment and economic growth. Using research and investor reviews, investment-seekers are uncovering companies and organizations that are performing as well, or better than more-established businesses.

Corporate giants from the past and industry leaders from the present can offer viable investment opportunities, if they offer investors good returns and positive prospects for the future. In many instances, investors choose income-generating investments that will supplement income earned from other holdings in their investment portfolio. Not to be undervalued or underappreciated, these assets play an important role in a savvy investor’s long-term investing strategy.

Albeit the pool of historic, current, and forecast information is deep, investors must wade through vast online and offline resources and collect data that supports a decision to invest. If an investment opportunity demonstrates it has performed well for investors in the past, is still currently performing well, and shows potential for strong growth in the future, investors should consider adding it to their portfolio. This is particularly true if it meets their tolerance for risk and market volatility.

Hard Assets Protect in an Uncertain Investing Environment

In the current volatile and uncertain investing environment, the investment community is looking to add hard assets to their portfolio. These investments, which include tangible items like gold coins, fine wine, and investing in shipping containers, have proven they can retain their value; even during times of economic and political turmoil. This appeals to investors, especially those who are concern about the effects of war on their investments, and the current state of the global economy.

To the surprise of many, during the global financial crisis in 2008 and 2009, hard asset investments outperformed popular stocks and bonds. This is because in most instances, the performance of hard assets is not affected by the decline of traditional investments, and thus are able to offset any portfolio losses. It is this resilience that makes including this asset such a good idea.

Financial advisers have long recommended that diversifying your portfolio holdings is a great way to avoid a worse case scenario. Adding investments that act independently of equities and bonds ensures that in the event of a “crash” or inflation, investors can rely upon a different class of investments to deliver strong, steady returns. This is particularly important for an investor who relies upon dividends and interest payments to supplement a retirement income.

A hard asset investment is generally a long-term commitment; usually upwards of 10 years. During that time, they provide strength to an investment portfolio by reducing exposure to risk, and by delivering profits to investors during times of uncertainty. From an investor’s perspective, especially one who has experienced adversity in the markets, these are two very appealing characteristics.

Most members of the investment community are not in a financial position to wager their money on high-risk investments, like risky bonds and the stock market. The approach adopted by many is one that avoids excessive risk, now and in the future. The introduction of hard assets works to shield an investment portfolio from unexpected exposure to risk.

Whether it be an investment in gold, shipping containers, or fine wine investments, hard assets should be part of an investor’s long-term investing strategy. Limiting exposure to volatile assets will better protect one’s principle and help achieve investing goals in a timely manner. Without including them, investors run the risk of overexposure to traditional assets that could be financially devastating if a “crash” were to occur.