Investing in My Future

Investing in My Future

Securing a great financial future requires proper investing. An adequate plan guarantees investors the desirable positive future. Gitman et al. say that having sufficient knowledge regarding the principles of business finance, including the time value for money, risks, and returns, and diversity is instrumental in guiding the investment process (1). This paper explores different options for future financial Investment regarding the three principles.

Approaches to Investing In One’s Future

Three methods prove suitable in the process of investing in the future. The proposals include advancing into businesses, buying mutual funds, and investing in real estate.

The first approach relies on the principles of cash flow. The policy explains that investing in a viable business ensures that the investor benefits from higher cash returns. The venture guarantees business growth through profits and propels the financial stability of the investor. The short-term gains in the form of profits make an investor enjoy the benefits of timely expansion, outdoing the business that depends on late inflows (Gitman et al., 1).

Stocks and bonds utilize the principle of diversity. Engaging in mutual fund contributions pushes investors to remit mandatory periodical contributions to a legal and formal saving scheme. At the end of a pre-determined period, the pull rewards contributors for using their resources as capital in other business ventures. (Gitman et al., 1).

The last possible approach is investing in real estate. Real estate investment bases on the principles of risks and returns, which encourage investors to take mortgage towards buying land and building apartments in which they can reside or rent out. The approach does not only reduce the risk of repaying the mortgage but also makes the investor a real estate property owner (Gitman et al., 1).

The best approach towards the Investment

Despite the three methods serving towards future financial security, real estate promises more gains. Owning a real estate property relieves the investor of rent. Also, land as a resource always appreciates. Keown acknowledges that land value increases by about 10% in five years (2). This data confirms real estate as the profitable regarding return on Investment. Therefore, investing in real estate proves reliable to investors who purpose to secure their future finances.

The Most Challenging Approach

Investing in stocks and bonds has significant challenges because it harbors most of the unknown risks in the market. Stock and bonds are seasonal. Therefore, improper timing of when to buy or sell the shares leads to huge losses. Also, stock markets have an overload of information from various sources. This state confuses investors who might incur substantial losses due to misinformation. Gitman et al. supports the use of extensive market research and seeking guidance from a long-term investor in the industry as the best way of conquering the challenges entails (1).

Conclusion

The discussion above indicates the best approaches to financial security. However, the criteria materialize only after the successful integration of appropriate monetary policies. Business investment requires the guidance from the principle of time value for money, Stocks and stocks require diversity while real estate must consider risks and returns. Due to the strengths and weaknesses of the three approaches, one needs to base on real estate and only engage in stocks after addressing all the possible loopholes. Proper application of the methods creates more gains and secures one’s financial future.

Sources

1. Gitman, Lawrence J., et al. Fundamentals of investing. Pearson Higher Education AU, 2015. Retrieved from https://books.google.co.uk/books?hl=en&lr=&id=DB3iBAAAQBAJ&oi=fnd&pg=PP1&dq=business+finance+investing+future+&ots=Ki18awotiJ&sig=pBYNJYtj70x0s9xh_pAUfOsCz3U
2. Keown, Arthur J. Personal finance. Pearson, 2019. Retrieved from https://mfpc.org.my/wp-content/uploads/images/JWMFP/2017/PersonalFinance.pdf