Common questions about investing

What is the best type of investment

There is no one best investment. Which investments that are best for you depends on you and your life. There are countless different factors that will affect which is the best investment. Such factors include your age, income, social status, personal goals, personal skills etc. A fixer upper property is a perfect example of this. It can be a perfect investment if you have the time and skill to put sweat equity in to the property and sell it. The same property can be a money pit if you need to hire contractors to renovate it.

This is just one example among hundreds of how your personal situation will affect how you should invest. You need to develop a investment strategy that works well for you, your life and your goals.

With this said. Long term investing in the stock market is very likely to make you rich in 20-30 years but it is not necessarily the best way you can spend your money.

I never have any money at the end of the month. How can i afford to invest ?

This is a very common question and I am sure a lot of us feel the same way. There are a lot you can do to improve your situation. I could write an entire book on the topic of how you can reduce the amount of money you spend each month and how you can earn more. If I where to give you one single tips on how to be able to save money it would be this.

Save/invest the money at the beginning of the month. Most humans are wired to spend the money they have. If it is in the accounts it will get spent and looking back you can not see how you could have spent less. If you use that money to invest at the beginning of the month and don’t have it anymore then you will adjust your spending habit accordingly without thinking about it. Your money will still last as long but now you invested some of it instead of spending it on things you didn’t really need. I know it sounds too easy to be true but most people can save at least 10% of their income using this technique. This way you fool yourself to be more frugal.

I have received a large sum of money. Should I place it an annuity?

No annuities are horrible investments. The main reason that they are recommended is that annuity companies pay advisers very well for referring clients to them. Often several percent of the deposited amounts. Annuities are an expensive way to save and you are better of investing the money in dividend stock. That will also give you yearly dividend payment and will most likely give you a lot higher total return than an annuity. Annuities are almost never the best choice.

Can I trust my financial adviser?

No. Not unless he is a fiduciary. Financial advisers are not advisers at all they. They are salesmen selling financial products and they get a referral fee when you buy financial products. They have no obligation to advise you to do what is best for you. They can in fact choose to recommend what is best for them. The financial instrument that gives them the highest referral fee. This is why so many advisers recommend annuities. They pay very well. Some advisers try to provide you with solid advise while others are little more than used car salesmen that try to lure you to invest in things that make them money. It can be hard to know whether you are sitting in front of a good or a bad adviser. The one exception from this is if your adviser is a fiduciary. Fiduciaries must put your interest first and you should always use a fiduciary if you want a financial adviser. Ask your adviser if they are a fiduciary. If they say no or dodge the question you should start looking for a new adviser.

What is a fiduciary?

A fiduciary is a financial adviser that has to put your interest first. Financial advisers that are not fiduciaries does not have any obligation to advise you to do to what is best for you. They are free to give you bad advice.

You should never use a financial adviser that is not a fiduciary.

Should I invest in my friends new company?

This is a tricky question to answer. Generally speaking it is best to not mix friendship and business but if your friend is a skilled entrepreneur then it can be a great opportunity to be able to invest in a company early. Doing so can make sure that you get a part of your friends success.

My advice would be to never invest money that you can not afford to lose in your friends company. If you have the money, can afford to lose it and understand that your friend might fail then it can be worth to consider.

Do not let yourself to get pressured into investing just because the owner is a friend. Your friend should accept if you choose to not invest. It is not a sign that you do not trust him.

My friend recommended this sure thing. Should I invest?

There is no thing as a sure thing. It does not matter what anyone say. The only way a deal can be a sure thing is if it is based on insider information. No-lose investments are often scams where you risk losing a great deal.

You can choose to invest but do not invest more then you can afford to loose. To not get tricked into betting it all on this sure thing. It might not be as sure as you think.

Is it easy to make money on the stock market?

Yes it is easy to make money in the stock market if you invest long term. This does not mean that it is easy to make a living from stock trading.

Can you make money trading forex certificates or binary options?

Yes it is possible to make money investing in FX certificates and binary options but it is also possible to lose a lot of money. A large percentage of all traders will initially make a loss when trading with these papers. A fraction of those will go on to become successful traders but most will give up before they become skill traders and will end up losing money that would have been better invested in other assets with lower risk.