Sunday 7 March 2021
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How to choose investment options which give a good return

Seeking a good return on an investment is something that all investors do. But there’s no certainty that your investment decision will lead to the outcomes you want: even if you put all of your effort into the decision you might still end up making a loss. That said, there are ways to maximise the chances that you’ll make the return you need. Here are some of the main things to think about.

Think about timings

While time is not an absolute guarantee of a return on your investment, most markets which crash or correct do manage to recover over time. For that reason, it’s worth considering tying your cash up. Sometimes, that’s a given. Buying a house, for example, is quite a long-term decision, but many stock market fundscan be liquidated at any time. Given that the Australian stock market has the capacity to rise or fall by well over a half a percentage point within just one day, it’s clearly worth developing some discipline and ensuring that you know how powerful time is when making decisions.

Choose your asset class

The next decision you’ll need to make is what asset class to pursue. The most obvious choice is stocks and shares, and this is what most people think of when they bring investing to mind. But there are lots of other options, and you should never assume that the most famous classes are the only starting points. Foreign currency, for example, is often speculatively traded in Australia and beyond – and the global market for this asset is over $5 trillion, so it’s clearly a popular option.

It’s important to remember that in the modern age there’s plenty of advice available on the Internet, which can help make the asset class decision much easier. Tips for trading contracts for difference are available at the click of a mouse, while information on other markets – like stocks and shares or buy to let property – can also be found with ease.

Prepare yourself

While there are plenty of strategic and technical considerations to make when selecting an investment option, you should also make sure that your mindset is ready to deal with the rigours of trading your preferred options. Foreign exchange trading, for example, is round-the-clock during the week – so you may find you need to be up at 3am in order to secure a trade around the world. And with each other market bringing its own set of problems, you may well find that the most important consideration needed to deliver a good return is to work on your stamina.

Ultimately, there’s only one goal for a person who is choosing an investment option – and that’s to make a good return. All other decisions you’ll need to make are simply tangents of that goal. So whether it’s the timing of your investment decision, the choice of asset class or even the mental preparation you need to take, keeping your eyes on the goal of making a good return is essential.

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