An investment is a choice you make to place or lend money in a property, vehicle, stock security, bonds etc. Ideally, an investment should be low risk and provide the possibility of generating high returns (interest or profit) over time.

It is important to recognize that investing is not a science. Hence, some people may seem to make money in whatever they invest, others just break even, and some may lose whenever they invest in anything.

Before you decide to invest, do your homework; it is important to check the number of those who made good returns on that investment.  The simplest and most uncomplicated technique for assessing any investment is the number of people who make money on it.

There are many ways to invest. Lower risk investments, which are safer, usually give lower returns.  Higher risk investments should offer higher returns; otherwise you should not consider them. There are also many "get rich quick" schemes, about which you should be very careful.  If it seems too good to be true, then it probably is too good to be true.

2009 was a catastrophic year for the global economy.  Investors lost billions in stocks, mutual funds, real estate and oil.  If you want to invest in something now, it is advisable to do some research on what the most promising or ideal investment opportunities for the moment. The following are the best options to consider before making any investment choice.

1. Income funds

Income funds are intended for investors who are looking for stable and secure returns on a monthly, quarterly or an annual basis. Income funds are likely to do well in the first few months of the year as inflation continues to fall. The fall in interest rates could lead to capital appreciation.

2. Gold investments

Gold is the best option because it is liable to provide stability and give reasonable returns.  It is a store of classic value that investors trust during hard times. Gold will always be a favored option for investors who want to protect themselves against inflation.  Since the start of the economic downturn, there has been a noticeable shift away from other investments towards the purchase of gold.

3. Mutual funds

Mutual funds are intended to attract ordinary investors. These are likely to give attractive returns over the long term. Long term means an investment of at least five years. Mutual funds are good investments because:

• they allow small incremental investments,
• they provide professional investment management,
• they allow great flexibility through the shifting of funds between a variety of investment assets

4. Commercial real estate

The rapid drop in commercial real estate prices and unbalanced sales are likely to provide good rental opportunities for investors. Real estate funds that invest in rental yield properties are showing potential.

5. Real estate

Real estate is likely to be fairly slow throughout the year. Therefore, buying a house as a short-term investment is not a wise choice at this point.

6. Liquid funds

These investments are an advanced version of bank fixed deposits. Liquid funds offer easy liquidity and are like short-term fixed deposits. You can buy liquid funds today and sell it four days later.  This offers you a lot of flexibility. Cited: Rediff News, 2009.

7. Fixed deposit

Fixed deposit is suitable for individuals and businesses that want to invest a fixed amount of money for a specific period at a fixed interest rate. The longer the investment period, the better the interest rate will be. Fixed deposit is also regarded as low risk and low reward investment.

The worst investments to consider

• Gemstones.
  
  The diamond you are wearing is not an investment; it's an accessory. If you are buying for investment, note that most beginner gem speculators lack the knowledge to make wise choices, and typically buy high and sell low.

• Collectables
  
  Coins, stamps, books, porcelain, works of art, and other unique items can be good investments for well-informed buyers who take the time and effort to become expert at their business or for those who collect such items as a hobby or for leisure.  If you are a new investor with limited amounts of money to invest, and are unable to study these areas thoroughly, rather keep away.

• Stocks
  
  Professional investors usually move their investments from stock to stock in order to reap the maximum benefits. Again, if you are a new investor with limited amounts of money to invest, and are unable to keep a constant, vigilant eye on your investments, rather keep away. Cited: CBN.com, 2009.
  
  Who can help?
  
  1. Regional investments agencies
  
  2. Top class investment expertise
  
  3. Invest in South Africa via the JSE
  
  How to invest and make money on the JSE (Johannesburg Stock Exchange)?
  
  If you want to invest in shares, you first need to open an account with a registered stockbroker of the JSE. You will discuss how much you want to invest and get information about risk versus reward in the shares on offer. Once you have decided which shares to buy, the stockbroker arranges for a dealer to buy shares on your behalf.

For investment opportunities, click here.

A final word of advice

Do not invest money that you cannot afford to lose.  If you need that money to live on, rather deposit it into a bank account until you need it.  No investment is 100% safe or foolproof.  There is always the possibility that you could lose some or even all your money, so you need to ensure that if that happens, you can manage without that money.

Sources:

• Wikipedia
• South Africa information 
• Learning Channel
• JE Financial consulting
• Rediff.com
• CBN.com
• Trade Invest SA
• Money web
• First National Bank

Last Update: 15 March 2010