In this age of prevalent financial scams, investing has been left for the really daring types. People nowadays tend to shy away from investing in companies and businesses fearing exposure to the risk of losing their hard-earned cash. The fear is quite understandable. Many companies and businesses have lured people to spend their money on their lucrative investment plan only for the business to disappear after a while causing huge financial losses to the investors. However, despite the bleak looking world of investment, there are still a places and ways you can use to safely invest your money with a legit business or company. This article looks at some of the ways of safely investing your money to ensure greatest benefits.
Do safe investments exist?
The short answer is no because every investment involves some level of risk, which means it can lose value. But the relative risk of investments varies widely. Some investments are inherently more risky than others, like betting an individual stock on a certain day will go up or down — risky. Compare that to FDIC-insured (and NCUA-insured, the National Credit Union Administration) deposit accounts like money-market accounts, savings accounts and certificates of deposit. You would be insured against a loss of principal up to $250,000. Of course, in exchange for all that safety, you get lower returns, often less than 1%.
Do your research. Most people will enter an investment deal blindly simply because the deal looks lucrative on the outside. Extensive and in depth research is crucial before committing to invest. If you already have a business or company you want to invest with then do intensive background checks on them. For those who have not yet decided where to invest ensure you research on and find out the best places you can invest your money.
A company’s annual report and the proxy tell you the general state of the company at the end of the last fiscal year, and as a potential investor you should pour over both of them carefully. But a lot can happen in the days between annual reports. If you’re considering investing in a company, you should check out the latest facts any way you can.
Review quarterly reports (10Q)
Every three months, publicly traded companies have to update shareholders on their progress. They usually issue a news release and hold a conference call, but the minimum requirement is to file a quarterly report on form 10Q with the SEC. You can get the 10Q from the company or from the SEC’s website.
The 10Q is similar in format to the 10K report but much less detailed. It includes a discussion of what has changed over the quarter and then includes quarterly financial statements with footnotes. The presentation may have fewer lines than the annual report, and it isn’t audited by any accounting firms, but it should give you enough information to determine how your company is doing relative to the same time period last year.
Knowing where and how to safely invest your money is not that heard. It just needs a few skills and adequate time for research. When done wisely and safely investments can be a huge source of income later in the future. But it is wise to remember that not every investment is a sure thing; each has a certain amount of risk attached to it.
Think about how soon you need to get your money back. Time frames vary for different goals and will affect the type of risks you can take on. For example:
If you’re saving for a house deposit and hoping to buy in a couple of years, investments such as shares or funds will not be suitable because their value goes up or down. Stick to cash savings accounts like Cash ISAs.
If you’re saving for your pension in 25 years’ time, you can ignore short-term falls in the value of your investments and focus on the long term. Over the long term, investments other than cash savings accounts tend to give you a better chance of beating inflation and reaching your pension goal.