Every investor, be it a budding newbie, or a veteran at Wall Street, thinks about one thing and one thing only. HOW TO GET BETTER RETURNS ON INVESTMENT? This question has plagued the big and small of the investment business, irrespective of their scope and range. But why would anyone care about their returns so much? Simple, because you only invest when you know you will get something in return. Why else would you invest anything?
Ever since history can recall, people have tried to crack the code of investment, they have tried different tactics and methods to invest their money in such a way that they get the maximum return on it, but nobody has been able to crack that code completely as of yet. The thing is, making better investments, and guaranteeing yourself a good decent return on them is not something that is absolute, and certainly not something that can be achieved through a cheat code. Investing is an art and a science, fused together to test the nerves, sentiment, logic, and the ability of its proponents.
From the outside, the investment business looks a daunting arena where only the most ruthless and people born with a golden spoon, survive and nothing else matters. The reality is far from it, because be it Warren Buffet, Peter Lynch, Benjamin Graham, George Soros, or even Elon Musk, they all started as beginners and rose through the ranks to make a name for themselves in the world’s greatest money making business.
Bottom line is, the investment business isn’t a game where only the privileged few have a seat at the table, you can also have your own seat at the summit, provided you are willing to pick up the tricks and trades of the game, put your heart in, and make sensible, potentially very rewarding choices.
And this brings us to the topic at hand, “How to earn valuable returns on investment”, so without further ado, let’s dive in and discuss.
#1. A seesaw battle between cost and profit
As the saying goes, you reap what you sow, and the investment business isn’t exempted from this axiom. A function called, the revenue function determines your gains, but it also determines your losses in terms of operational cost. It is simple, you invest $5 on a business, which costs you $1 as operational cost. Now when you earn a profit of $3 from this investment, your operational cost will be deducted from this, making your total gains to be, $2.
Keeping this in mind, in order to gain the possible return on any investment, make sure your operational cost is as low as possible. Saving up on the costs will mean you earn more as profit. If you are running a business, trimming down on some of the departments in your company that are not doing so well, will not only free up some space in the budget because of no human resource, it will also help you to better re-allocate the money you free up, into better investments.
#2. Choosing your battles wisely
Our world is as diverse as they get, and in this world almost everything is tradeable. And since everything is tradeable, it means you can invest in almost anything. But these plethoras of options do pose a conundrum because you don’t really know what to invest in and what not to invest in. The answer is simple, yet complicated.
To maximize your gains, every single time you invest, make sure you pick your battles right, make sure you pick the right market to invest in. Be it real estate, IT, Forex, stock exchange or anything else, the real trick to investment is to understand the market. If you are a newbie in the world of stock exchange, for example, try shadowing a veteran of the business, and try understanding what he does that makes him so successful.
#3. Getting with the times
You cannot utilize the strategies that did well in the 19th century and expect them to do the same in the 21st century. It just cannot happen. So you need to get with the times and think ahead. Add different layers to your game, make use of social media to promote your image, and even hire a team of marketers to get a word out.
One more thing to do here is to invest in a website. You should always hire professional web designers to create your website, since it is the first thing your customers see, and this helps them formulate a first impression.
#4. Planning an investment always yields better returns
There are two types of conventional investments, one that you plan for, check every aspect, everything associated with. And the other one which is not planned. And if you take a closer look at both these types of investment, you would realize that planned investment always takes the cake when it comes to better returns.
But why is that? Simple, you plan your move, check out the conditions, take your investment into account, and then you decide to invest, or not, depending on the outcome. You can do a risk analysis, to identify which investments are high-risk, which are low-risk, and which don’t have any sort of risk associated with them.
For instance, you can invest in a Savings account, Peer-Peer lending, Bank Bonuses, Online checking account, Deposit certificates and so on, these are some of the low-risk options you can take to get a return on virtually nothing. This planning definitely brings you more fruitful results as compared to the unplanned ones.
#5. Either improve the performance or improve the efficiency of your business
A detailed and well-kept financial map of your entire business will help you to understand where the money comes from and where does it go. The money your company spend is very important when it comes to developing a strategy to increase the returns on your investments.
To do this, you will have to check for each department in your company, what are they doing, how much are they making, as opposed to how much are they costing. Focus on the departments that are losing money, before you focus on the departments that are actually making money for you. This will effectively and immediately cut down on the expenses and help you see clearer.