How to Invest Money

The question is how to invest money to make money. The answer is to invest money only after asking some questions about the fundamentals of investing. Here are the questions to ask and how to invest money to avoid scams and abuse in general.

How to invest money, rule # 1, is that there is no such thing as a perfect investment. A perfect investment would have the following features: secured, guaranteed to earn money and much of it, high liquidity, zero costs and expenses, large tax exemptions, and easy to supervise … so you always know where you are financial. All alternative investment can be compared based on investment fundamentals, but no honest proposition contains all of the above features.

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A scam will generally imply that safety and high benefits are guaranteed. Your first question before investing money: what are the specific safeguards for security and return on investment? If the response you receive sounds confusing or misleading, you do not need to ask any more questions. Something is rotten in Denmark, as no investment offers high security and high profits … except for scams. Now, let’s move on to other safest investments questions and questions to ask. Remember, a large part of knowing how to invest money involves knowing how to avoid bad investments or those that do not fit your needs.

Ask about LIQUIDITY. How quickly and easily can you get your money if you want to collect? What will it cost? This is a very honest question, and the answer you get should be direct. You are out to invest money to make money; not to stay with a loser who will cost an arm and a leg to liquidate.

COST OF INVESTMENT is another basic investment you need to ask. Most investments involve fees and commissions to buy, maintain and/or sell. Many times the details are in the fine print, so be sure to ask in advance. High investment costs can turn a winner into a loser. For example, a good simple fixed annuity will pay a competitive interest rate and will have no charge to invest or maintain; and no charges to collect after a few years. The wrong annuity contract can cost you 3% or more a year on charges and charges, plus hefty charges if you cash out in the early years.

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Be very careful when an investment promises tax benefits. Ask questions first and get it in writing before investing money. Then, run it by your tax professional if you have one. If you do not, take a pass. Your goal is to invest money and make money in the process. Do not take a chance and end up in trouble at the time of the tax.

Our last area of concern as to how to invest money and basic investment that I refer to as VISIBILITY, or the ability to control your investment. After investing money, what? Can you track the value of your investment so you know where you are financially at all times? Will you receive statements every quarter and at the end of each year that shows the value of your investment assets?

As a financial planner, some of the worst horror stories of the new clients interviewed were brought to light when I asked to see their records for the investments they had. Sometimes your records or statements were incomplete or otherwise questionable. Sometimes these investors could not find any records at all and did not know who to contact to find out the status of their investment. That’s a perfect example of how to invest … NO.

Before investing money, resolve the basic aspects of the investment covered in this article to avoid fraud and other important investment mistakes. Do not be afraid to ask the questions presented here. If you are dealing with honest people, they will be happy to answer your questions. If not, look elsewhere.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investment experience. For 20 years he advised individual investors, working directly with them to help them achieve their financial goals.