It's extremely easy to invest money. In fact, nearly everyone invests money in one way or another throughout the course of their life--whether through a bank account, 401(k) plan or business venture. What is much more difficult than simply investing is the act of investing money for optimal return. Not only does doing so require a person to determine what it is, exactly, that optimal return means to them, but in order to invest for the best return you need to really become acquainted with all of the intricacies of investing.
Instructions
Step1
Determine what it is, precisely, that "best return" really means to you. Is it completely safe, dependable return on your investment or is it riskier, potentially higher-yield return? These two conditions are mutually exclusive and you need to determine which you're really after before you can begin to invest your money.
Step2
Invest as much money as you safely can to optimize your return. Obviously, the more money you invest, the more money you stand to gain as a result. Part of investing for the best possible return is the act of saving as much money as you can in your day-to-day life in order to have more money to invest with.
Step3
Diversify your investment types as well as your portfolio. Most investors know that it's a good idea to diversify any stock holding they have, but fewer realize that it's an even better idea to diversify one's holdings amongst many different types of investments. Invest your money wisely in stocks, bonds, mutual funds, real estate holdings, business ventures and other investment tools to really make sure that your money is constantly in a position to provide you with the best possible return--regardless of market conditions.
Step4
Learn to garner the best return possible on your invested money even in a bad market. One of the chief methods of doing so is to alter your investments to safer ventures and holdings during harsh financial times, or to use means such as selling stock short to make money while everyone else is losing it.
Step5
Find the balance between risk aversion and risk seeking. The best investors--those who consistently gain the best possible return from their investments--are those who learn to carefully balance their investing strategy between the extremely risky and the extremely conservative. Growth and income mutual funds are fine tools, but they won't make you anywhere near optimal returns on your money because they're too conservative. It's also a bad idea to invest all of your money in micro-cap stocks, despite the fact that they have a potential for quick and explosive growth, because they're so risky that you stand a fair chance of losing everything.
By Geoffrey Weed
source : ehow.com
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