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Things to consider for Safer Investment with High Returns
Who doesn’t want to go for investments that offer the highest returns without losing the principal money?
Due to this, many investors have been looking out for an investment plan where they can make more money with little or no risk. And why not?
For a comfortable future, investing in the right places is required. This another income source helps grow your investment and secures your future.
Well, there are many ways to make investment-right from the safest choice to medium-risk investments. What does it mean? This says that you can find a variety of returns that goes with your risk profile.
Our pro-advice would be to make a diverse and well-rounded investment to stay safer.
Tips to calculate return on investment
Time Horizon and Risk tolerance Don’t ignore the time horizon and risk tolerance when deciding how to allocate your investments. To make less risky investments would be great for people who are near their retirement.
These less risky investments are great for short and immediate goals. If you are a risk-taker, you can go for riskier investments but don’t forget to diversify. You should perform your homework that can fit your short and longer goals.
Return on investment can be positive or negative Your Return on investment is calculated based on what is the current values of your investment when comparing to what you have paid for it while buying.
Due to this, your ROI can be either positive or negative.
For instance, you have bought a single share of any stock for $70. Afterward, you can sell the stock for $100.
This means your ROI is positive of 30%.
On the contrary, if you sell your investment for $50, this means you have a negative ROI of 20%. So this is how your ROI should be calculated to see if it’s negative or positive.
Check what you paid initially Well, investments are not simple and easy to calculate. They are not just simple numbers as discussed in the above example. You need to pay for the commission on mutual fund trades and stock.
When you purchase a real estate, your investment costs are mostly higher than for what you have purchased for as additional costs like real estate commissions and the closing cost adds up.
So it is advised to take many hidden charges possible when calculating your Return on Investment when calculating your ROI.
Don’t forget to check for “hidden” income that you have earned from investment Check if your stock pays you dividend every quarter. If yes, this should be a part of your ROI calculations.
Are you getting rent payment on the property investment? You should consider that also.
The more compressive information you add on the expense and income side, the better the chances of getting the exact number.
Divide the revenue increase with the opening investment Now let’s look at the simple ROI formula:
Return on investment is equal to investment gain divided by the cost of investment.
So your ROI can be realized or unrealized. The next question should be how to calculate return on investment formula.
ROI= Investment Gain/Investment Cost
This is based on whether you have sold the investment or are holding it. Let’s see how to calculate the Return on Investment in both cases:
If the investment is sold, net income is used as the first number in the above-given formula.
If you have held the investment, your current investment is divided by the cost of the investment. Let’s explain this with an example:
If you buy a property for $250,000 after including closing costs and agent commissions and sell it after $300,000 after three years.
In such cases, your ROI formula will look like this:
ROI = $300,000-$250,000) divided by $250,000
ROI= $50,000 divided by $250,000
Check how long you have been holding on to the investment to see your annualized return While the return on investment is simple, they are limited as well.
These investment doesn’t take time into account. For example, if you have purchased a stock of $200 and one year later it was worth $220, then your ROI is 10%. These numbers will please you surely.However, the will get disappointed to see the total return when evaluated with the period. This disappointment comes from the dissatisfaction of the compound growth of your investment.
This is why most people prefer to go with the annualized Return on Investments. These annualized formulae are a bit difficult.
Annualized ROI= (current value of the investment/initial cost) (1/Years)- 1
For Trade Investment Here is a pro tip: This one segment of investment usually performs well. These offer you minimum fixed returns. a) Secure Trade Pro These investments are backed by trading activities and investors and you get the specific return irrespective of how your trade goes. Such investments are meant for ordinary investors and people who are looking for a retirement plan to enjoy financial freedom.
Here you can get a minimum fixed return and is not based on your trade performance and the high result can give you higher ROI.
You can start investing without having detail knowledge about the financial market. The risk is lower as an investor do get a specific amount irrespective of their trade performance.
b) Secure Trade Safe This investment offer that one thing that everybody is looking for a guaranteed return. They are offered by the privately-owned bank. As an investor, the bond generates a 3% interest rate per month probably in 2 years. Afterward, the investor can get the investment back.
These bonds are safe as they are covered by an insurance company.In case your bank doesn’t pay the investment back, you can get the invested sum by the insurance agency. People can start by investing less and get a guaranteed return.
You get the fund of your choice that ensures higher returns and minimal risk. Well, investing is considered to be a great way to build wealth and the above-discussed investment are some of the great options.
The range of options offers you different ROI.Understanding how to calculate ROI can help you with some real number and make an informed decision. While you may find it a daunting task in the beginning, but later it will give you better results.