Investment Possibilities – Not a Coat Or a Bikini

Business conditions and your own finances are always in changing. A good place today for your money may be a bad place tomorrow. So the wise money manager makes regular comparisons pitting one investment against another. Our purpose over the next few articles offer some suggested standards by which you can make comparisons and judge what particular investments are best for your purpose at any given time, and why.

Always remember, there is no one type of foolproof investment suitable for all purposes. Investments are just like clothes. The kind you buy to wear in the Alaska winter are not the kind you buy for a summer trip to Florida. Acquiring a speculative stock in the face of business uncertainty is like putting on a bathing suit when it is threatening to snow. Buying a low-interest bond during an inflation is like wearing an overcoat on a balmy day in June. You probably don’t need that much protection. To carry the example a little further, if your own personal circumstances are such that you can barely afford to buy clothes for office wear, you would not be smart to splurge on a tuxedo.

Thus, the first thing that you, as an investor, must do is get clearly in mind the job you want each particular investment to perform. If you want it to protect the family in case the breadwinner dies, that is one thing. If you want it to work for you over the years and are willing to take some risk and all investments require some risk, that’s another thing. And there is not much overlapping. One investment usually does one job, sometimes two, but rarely more.

The more “risk” taken usually the greater the return.