Wednesday, March 10, 2010


Almost anything can be an investment. You might be investing in coins, stocks, bonds, antiques, baseball cards or, in frozen orange juice. Every investment has unique information that you will need in order to make a profit. You will need to do research on the nuances of your particular investment. For example, if you invest in coins than you must understand the grading system used to determine a coins value. If you invest in orange juice than you will need to know the current and future weather conditions in a state like Florida? If you invest in porcelain figurines than you will need to know the affects crazing (cracks in the glaze) has on the porcelains value.

Although each investor must become educated in the minute details of evaluating any given item, there are a few basic tips that I have learned (sometimes from being burned) over the years.

Before you make any investments, you must first do research on the item(s) you wish to purchase and resell later on for a profit. This entails finding out in advance what the item might sell for in the future and where you would be able to sell the item (internet, wholesale to merchants etc). The internet, newspapers and even retail stores should give you information on the potential value of your item today and by looking back at past prices and comparing them to current prices you might get some indication as to how long you will need to hold your item(s) before you can make a profit.

The greatest mistake most people make when investing is that they pay too much for their items. This would include paying too much for the basic item, for fees to purchase the item and, for commissions/markups. You will often hear stock market investors say that the company is a good investment but the price for the stock is too high. The same can be said of paying too much for other investments like collectables, real estate or, even U.S. Treasury Bonds. To really increase your return on your investments you should find out what the going price is and try to pay less than that.

You should watch out for items that are offered at much less than the average price. Many collectable items offered at low prices are often either flawed or counterfeit. Real estate may have some hidden problems like a leaky basement, a right of way, unsettled title etc. In short, don’t pay too much for your investments however, if it is offered at prices far below the current market, make sure you find out why the item is so cheap. That said; don’t be afraid to look at investments that appear to be really cheap. Sometimes you might get lucky and buy something cheap because the seller either does not know the true value or, doesn’t care what the value is and just wants to get rid of the item as is often the case in estate sales and with people who need to raise cash quickly.

I have another tip to give to investors. Please make sure that you do research to find out any potential legal issues that might crop up regarding your investment. For example: current and potential changes in local zoning ordinances may affect the amount of money you make on your investment. New zoning could put restrictions on your real estate which will make you property harder to sell in the future. On the other hand, you could benefit from a change in zoning. Many real estate investors will make out a purchase agreement on a property with the stipulation that for the sale to go through, the zoning must be changed. Once the new zoning is approved then the sale can be consummated.

Other legal problems might involve potential tax changes. The taxation of dividends, how depreciation is handled and, sales taxes are all examples of things you should look out for before you make an investment.

I have given you just a few tips to save money on your investments. They basically boil down to two basic rules: Do your research and don’t pay too much. Many people will prefer to hire someone else to handle their investments. If you do want to hire someone you must still do research. You need to know about the person you are hiring and also his company. In short, you need to do a background check to find out that the person and company you are dealing with is honest and also that they have a good track record at making money for their clients.

Finally, no matter what you invest in or how you invest, you must keep track of your investments. Unless you are a stock or commodities trader, you should not check on your investments every few minutes. However, you should evaluate your investments at least once each year to make sure that you will reach your investment goals.

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