Introduction
Investment is the most valuable opportunity that most individuals and businesses eye for as a long-term capital gain. Most individuals have aims of getting better investment schemes that can enable them to reap big in the future alongside safe guidance and keeping of the initial capital especially after retiring from the public services. Such amount of money which could have been squandered or lost in other non-productive activities is invested in a different investment scheme for future security. To make the investment, a serious investment procedure is followed so as to ensure that the investment scheme is not deceptive to the investor. Most investors thus seek the services of trained financial managers and investment managers to seek their divine opinion and calculations based on the present value of money and the expectations.
It is thus very important for the client to consider several factors before making a decision on which investment scheme to choose. However, this is because the stock market keeps on fluctuating and it might be a bad omen to the client if it goes against the expectations and market predictions and can be an advantage when it favors the investor/client. A thorough market analysis must thus be conducted to choose a scheme that considers all the future market changes including inflation, depreciation and appreciation of the value of money and other asserts involved in the investment scheme.
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Considering these market fluctuations, an investment scheme is only valid if it brings forth a desirable outcome which is profit. In case the value invested is less or equal to the amount generated after a given period, the investment deal is considered vague and deceptive. This is because the value of money in the future date shall have depreciated greatly(Lyons, 2015). As such, keeping one's money in their pockets instead of investing it is wrong since the money doesn't work for one and they will never have more money than what they save. By investing the money, one gets more money to generate more money through earning interest on what one separates away or by buying and selling assets which increase in value with time.
Liquidity
Liquidity refers to the easier it is to convert an existing asset to cash. Cash assets including money market funds, bank savings, and checking accounts have a high level of liquidity. The client thus should consider in investing more on these asserts which can be easily translated to cash in case of any calamity or when an eventuality strikes. Apart from the client should thus ensure that they increase the value of current asserts to be higher than the fixed asserts such us the rental houses that he has invested more than 80% of his income. This is very necessary in order increase his liquidity ratio. A liquidity ratio is used to indicate the number of months that an individual and a family can meet household expenses by tapping cash assets especially when they retire or lose a job or were disabled. To calculate the liquidity ratio, we divide cash assets by monthly expenses.
Diversification
In any investment plan, diversity is very important since it helps to capture a wider market as well as spreading the risks. I will thus wish to make the client invest in other sectors of the economy such as the public transport and roads rather than putting all the eggs in a single basket to address the issue of market fluctuations. Apart from this, the client should increase the amount of capital invested in other areas such as the cash in the bank which will thus help for better diversity. The client ought to choose a company with a strong financial base in order to do a diversified investment. This is done by considering the value of profit made by the company.
Flexibility to change with unexpected circumstances
The most discouraging factor to an investment scheme is fluctuations in the economic trend; the fluctuations involve recessions and inflations which lead to a reduction in the quality of the currency. To counteract such unexpected changes, the client should ensure that he perfects the insurance scheme of his two kids since, in such a scheme, the agreement remains regardless of the economic status.
Time dimension of investing
Time value of money is said to be the value of money invested today and its worth in the future. For a good investment scheme, the client must ensure that he makes his investment in a scheme that will ensure that the value of his money increases with time until the end of the specified period.
Savings for unexpected needs
Since the client has a family to take care of, some uncertainties are sometimes bound to rise. The client thus must make some current savings which can be used as emergency funds in case something of that sort crops.
Conclusion
Investment is a life time savings that can help to maintain a formally employed individual to continue leaving their prestigious life’s regardless of retirement; it is thus very provident that individuals to get some good investment schemes so as to put their cash in them for better-planned life.
Reference
Brown, L. D., Call, A. C., Clement, M. B., & Sharp, N. Y. (2015). Inside the “Black Box” of Sell ‐ Side Financial Analysts. Journal of Accounting Research , 53 (1), 1-47.
Cronqvist, H., Siegel, S., & Yu, F. (2015). Value versus growth investing: Why do different investors have different styles?. Journal of Financial Economics , 117 (2), 333-349.
