The Best Investment | Marvin Germo

The Best Investment

By: Marvin Germo | July 22, 2014

What is the best investment?  Is it buying one of the most expensive cars out there?  Is is getting a really big house?  Is the stock market the best investment that will get you the best yields possible?  Or is it in the forex market?

Is there such a thing as “the best investment?”  For this article, my co-speaker in Money Smarts Batangas, Jeremy Tan will share 4 tought provoking questions to help check if you are on track towards the best investment that fits you.

What is the best investment

The best investment

…is not necessarily the one with the highest return.

…nor is it the one with the lowest risk.

…neither is it just about investing in you.

So how can we say that we have the best investment?  What are the criteria that make an investment worth considering? In my short stint as a financial adviser, I have been asked the “best investment” question numerous times and it is quite difficult to give a basic, general answer for all. The best investment would vary depending on the profile of the person asking. Having said that, I do have 4 questions I usually ask to determine if someone is on the right track:

1.  What’s your investment for? It all starts with a dream or goal. If one is unsure what the investment is for, then it would be hard to say if it’s the best investment. For me, the first thing we figure out before investing is the goal. Without that, it’s as good as going nowhere. Without the end in mind, we tend to save and invest for nothing, which eventually ends up with us spending it on something we don’t really need.

2.  How much is your target for your investment? A goal more often than not has its financial equivalent. Without it, then it will be difficult to say if you have the best investment. For all you know you might be investing in an instrument that earns at a slower pace, thus, endangering you from achieving your goal.

3.  When do you need the money? Time is of essence when investing. Knowing when you need your investment prevents you from withdrawing before that time. If you need the money by the time your kid is in college, then the only time you withdraw is when your child is about to start college.

4.  What investment instruments did you use? If all questions above were answered the next thing you want to know is if you got the right investment instrument for your goal. The investment vehicle you use should match the time frame you have before you’ll need your goal. A goal where you still have 10 years time to prepare will have a mismatch if investment instrument is time deposit. While a goal needed to be achieved in 1 year might be at risk if selected investment is a mutual fund where risks are higher on the short term.

With all these questions answered, what now is the best investment? The best investment is being able to know the direction you are headed to. It is the one that addresses your needs. There is no one-size-fits-all investment. It is the one that leads you to achieve a bigger goal.

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