Sunday, August 14, 2011

Advantages and Disadvantages of Investing

Investing is a way of utilizing your money over a certain business venture or an enterprise in order to gain money return or for better profitability.

There are several types of investments.  Its type depends on how the investing has been made.  Some may invest on buying a certain property of high appreciating value like a house or a real estate.  Investing may be done by acquiring a share of stock from a certain company.  It can also be referred to the human education which can be utilized in the future. 

Investing require a thorough study on where you should be putting your money.  Keep in mind that when you invest, there should be a money back guarantee to avoid turning your investments in to gambling or just speculations.

A number of advantages and disadvantages may be linked to investing.  These are the:
-          Investing makes your money work on your behalf.  Nowadays, it feels more advantageous to invest on something that just let your money be stocked for nothing.  Money interest on your bank savings account might not be enough to support you in the future.  Due to the current demands of life, it seems that man should not stick to only one paying job and depend on your retirement pension in the future.  The value of your retirement pension may not be enough to cope with the world’s inflation.  By investing wisely in a profit making institution, you can make the most out of your present earnings.
-          Given that investing requires a thorough study on how your money will work, there are still other factors which may be encountered along the way that may affect the investment you made and make it fall.  In other words, the probability of you losing your investment is still there.  Example of this is when you invested on an atypical commodity.  The probability of gaining profit from it will depend on its attractiveness in the market and its accessibility.

Beware of turning your investment to a gamble.  Make sure that you will make an extensive research of the current and future market before you pursue with investing.

And do not forget that investment is a long term process and if you want to feel the advantages of it, it will take time. Long time. Sometimes, if you get lucky you can see impressive results in few years, but it will be only short term success, but not sustainable investment benefits. 

Sustainable benefits of investment can be realized only when risk of investments is properly diversified over variety of investment assets. 

However, the disadvantages of investments you may suffer immediately. If you will start to invest in stock market not carefully you may loose money very quickly and will be hard to regain it back.

You have to consider seriously advantages and disadvantages and to make a good investment strategy before started to invest.