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How Do I Make a Wise Financial Investment?

Brokers may offer helpful investment advice.
Financial planners can be some of the most expensive and most knowledgeable sources of financial planning advice.
Investors should study the opportunities and risks entailed in a particular investment.
Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 August 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
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Making a wise financial investment is a goal that many people strive to achieve. The specific type of investment will vary, depending on the underlying financial goals of the individual. Whether making an investment in stocks, bonds, property, or some other asset, there are a few basic resources to call upon in every instance.

One of the first tools to employ in making a financial investment that is sound is to explore the current status of the opportunity in detail. For property and real estate, it is important to assess the current value of any buildings on the property, how the area is currently zoned, and how the property could be utilized. With stocks and other investments, it is a good idea to determine how stable the company issuing the stock currently in within their market and how the unit price compares to other stocks issued by equally stable companies. Knowing how things stand in the here and now forms the basis for evaluating the potential of the financial investment in more detail.

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After gaining an understanding of the current status of the investment, it is important to look into the history surrounding the performance of the opportunity. With real estate, it is important to determine if the title to the property is solid, that there are no hidden liens or judgments against the property, and that historically the value of real estate in the area has either remained stable or appreciated over time. When it comes to stock options, noting the historical upward and downward movement in the past, as well as the mitigating circumstances that provoked that movement, will help the investor to understand how the financial investment came to reach the present value.

Once past and present circumstances are studied and evaluated properly, the investor can move on to the task of projecting future performance and value. Doing so makes it possible to select the right bonds, stocks and commodities to include in an investment portfolio, structure a 401(k) to best advantage, or decide whether or not to participate in an employee sponsored retirement fund management program. Often, it is a good idea to obtain the counsel of a financial advisor or broker when stocks or commodities are involved; he or she is likely to be able to identify potential events or other factors that will influence the value of the investment in the future.

While there is much that you can do to arrange your finances to best advantage, never feel that there is anything wrong with seeking professional help with any type of financial investment. Whether your local banker, a budget or financial planner, or some type of investment advisor, drawing on the expertise of people who know investments and what can happen with them will save you a lot of time and worry while increasing your chances for success significantly.

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