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Interest earnings and possible long-term returns for financial investments

Investors should think about their goals first - investment comes second

Millions of investors are always searching for profitable investment opportunities to increase their fortune or build one step by step. Yet the number of financial products that can be used as investment opportunity is virtually impossible to understand. Therefore, it is important for the investor to have at least some basic knowledge about investment opportunities to choose the products and decide where to invest money. Some aspects have to be considered when searching for an investment opportunity that fits the personal situation. What is the perfect investment opportunity?

There is not just one answer to this question because there is no such thing as a perfect investment opportunity. The perfect investment would be absolutely safe and yield high returns at the same time, something that does not exist in reality. For one investor, a safe investment may be a good investment while for another investor, only an investment that yields high returns is a good investment. Fortunately, there is a large number of opportunities today with many different forms of investment, giving investors both very secure products and products with a return rate above average. Moreover, there is a large number of choices regarding flexibility and availability of liquid assets. Investors who want to accumulate funds step by step over a long period of time can pick from different forms of savings schemes, e.g. schemes offered by banks, life insurances, pension plans or investment funds. Investors searching for high returns in the short term can pick from derivatives (options and futures) or trade foreign currencies. Obviously, investors can vary their portfolio with investment opportunities that combine aspects like security, return rates and liquidity. One example are certain investment funds where a return rate is guaranteed while they can always be sold if liquidity is needed. At the same time, there is some security if the money is invested at least for a certain period. Basically, every investment opportunity should be picked according to one´s own wishes and goals regarding the respective product. These wishes and goals have to be defined first, though, before the investment that fits them can be picked. Many forms of investment can be ruled out if a certain goal is clearly identified. For example, an investor searching for a very secure product with the guarantee to get the invested money back after some years should not be thinking about buying shares or derivatives. Naturally, fees and other costs accompanying the respective investment have to be taken into the equation as the return can be reduced dramatically because of high fees that are not obvious at first glance. A good example are investment funds with asset-based fees of five per cent and management fees of two per cent annually, the amount of fees in five years equals three per cent. If the investment fund increases its value by six per cent annually, the return rate for the investor is merely three per cent.