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Factors influencing the right investment ventures

Updated on September 25, 2015

Factors influencing the right investment ventures

1. Capital available
Venturing investment is first fully depends on the amount of capitals available by an investment party, that is the total sum of money available to be used for investing. Small capital investors can venture into small capital investments like fixed deposits, insurance, government bond, or unit trusts. Whereas, those have the medium or higher capital can venture into stocks, property investments, corporate bonds, loan stocks, foreign exchange, or commodities exchange. Normally investments capital is directly proportional to potential returns.


2. Risks
Risks are the vital factor to be considered by all investor before venturing into any investment. It means the potential of capital loss during the investment period influenced by current economic situation or business situation. Those investors who want a secure investment with minimal or nominal loss of their capital should considers investments like fixed deposits, insurance, unit trusts, property investments, and government bonds. However for those investors which dare to take the risk for higher returns, investment ventures such as stocks, loan stocks, foreign exchange, and commodities exchange are the way to go. Normally, the investment risk is directly proportional to potential returns.

3. Profit returns
Profit returns are the main purpose an investor make an investment. The nature of the profit returns is influenced by the above factors which is capital available and risks. Normally capital and risks is directly proportional to potential returns. Investment ventures which provides low or medium returns includes fixed deposits, insurance, government bonds, and unit trusts. While the investment ventures which provides higher profit returns includes property investments, foreign exchange, stocks, and commodities exchange. The amount of profit is also depends on the ingenuity of an investor in managing their investment throughout the investment period.

4. Liquidity
Liquidity means the ease of convertibility from investment profit into cash. It is an important factor to consider the withdrawal ease, which is cash that can be withdrawn by an investor during the investment period when needed. Some investments such as fixed deposits, stocks, government bond, and foreign exchange can be easily converted into cash immediately once the investment returns is withdrawn by the investors. However, there are some investment returns which can be difficult in converting to cash immediately such as property investment, unit trusts, and insurance due to time needed to process the capital withdrawal and the cash conversion processing by the investment firm or the bank.

5. Purpose
Planning the purpose of an investment ventures is crucial in understands the need of investors to invest their capitals. Some investors may invest for a short period before withdrawing the financial needs later such as fixed deposits, unit trusts, and stocks. Others may simply wanted a short period profit through speculation such as stocks and foreign exchange. While other investors may store their investment capital for savings and higher returns in a long term such as insurance, bonds, and unit trusts. Depending on the purpose of their investment, it has to fulfill their needs such as potential returns, security of investment capital, and liquidity ease.

6. Knowledge
All investment ventures have information and details on the natures of the investment such as the factors mentioned above (capital needed, risks, liquidity, purpose, and potential returns). It is important for an investors to fully understand the nature of the investment through the master prospectus prior to investing. Other than factors listed above, investors should also note the charges and taxes imposed on investments and returns, and also aware that past performance cannot be used as a reference for risk incurred and potential returns, and the prices of their investment value may goes up or goes down depends on the nature of the investment.

7. Online availability
Nowadays, almost everyone is accessible online and investment is no exception. Investors can now invest online provided they considers the factors above plus having the online gadgets such as computers or smartphone. Investment via online enables investors to start new investments, checking on their investment status, checking on the current prices of their investment ventures, obtaining financial updates and business news, and withdraw investment profits all by online. As long as the investors has registered account to any investment website or application on the smartphone they are good to go.

8. Investment portfolio
Investment portfolio essentially means to diversify the types of investment. There are several reasons to create an investment portfolio. First, is to balance the risk incurred. This is done by balancing the total profit and loss of each investment ventures, which essentially means a profit in one investment can be used to compensate the loss of another investment. Second is to diversify the potential investment returns. This is done by combining the total investment returns from all the investment ventures in an investment portfolio, minus the loss incurred. There is a proverbs saying ‘never put all the eggs into one basket’ which is true reason in setting up investment portfolio.

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