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Creating a Portfolio and Investing Money Wisely

BY: Sathish k Paul | Category: Finance | Submitted: 2010-10-31 08:19:12
 
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Investing money is an art for some people. For many other people it is a very difficult process. There are many people who go to a great deal of trouble to try and invest their money. After all the effort, they realize that their money is not used optimally. Some of them lose their money and other people have very less returns than they should actually have for that kind of investment.

The best thing that should be done to maximize the investment is to make sure that the person earns a lot of returns. This return will not come without the risks that are associated to the investment. There is a saying that the risk of the investment and the returns are directly proportional. This is in the normal circumstances, where the risky investments will give a lot of returns. On the other hand, any person who invests in less risky options will have less return.

In a volatile session of the economy, it is a topsy turvy ride and people will not know how to invest. This is a much talked about subject. There are certain methods of investing, where you will be able to invest money wisely. This will enable you to create a good portfolio and earn a lot of returns.

The best portfolio will contain the following investments that are done wisely.

1. Real estate:

Any real estate investment will be able to earn you a lot of returns. The subprime crisis was an aberration. The truth is that as time goes, the value of real estate will only increase, but your timing should be right and you should try to invest when the prices are right. If you invest at the peak, you may lose money, but you should remember that real estate should be part of the portfolio of investment.

2. Gold:

The value of gold has been on a run. The gold value is at an all time high now. Is this the right time to invest in Gold is a common question in the mind of many people. The answer is Yes. If you do not have Gold in your portfolio, then you should buy gold. It is one of the best investments and as long as people hoard gold and value it, it should be part of the portfolio. You can buy Gold in various forms, but buying exchange traded gold will be the best as it will not lose the value and you can sell it in quick time on the markets.

3. Equity investment:

Every person who is a regular earning person should invest in the equity markets. These equity investments are subject to market conditions, but they are one of the best asset classes that are available. If you invest in good companies and wait for the long term returns, you will be able to get a lot of returns. There are two things that you should remember when you invest in the equity markets. You should not be scared and you should not be greedy. These are the two most common reasons for the downfall of many people who invest in the equity markets.

4. Fixed deposits / Bonds:

These are the safe investments and have guaranteed returns. As you grow older, you should invest more in these than in other forms of investment. So make sure that you have adequate percentage of investment in these too.

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