• Posted March 3, 2022

A Financial Planner's Tips On How To Get The Highest Possible Returns in Investing

When money is just sitting in a bank, it tends to lose value over time. Therefore, rather than let your money slowly lose its value, you can increase its value and potentially build upon your wealth by investing. Our certified financial planner provide three things you can do to help you maximize your returns when investing.

Take on More Risk

A seasoned investor would be fooling him or herself in thinking that they got to where they are today without taking at least some risks. Investing doesn’t have to be an incredibly risky endeavor—and you always want to manage your risk portfolio—but it does require some risk, especially if you intend on increasing your threshold of potential returns. In the end, even if taking a risk doesn’t work out, you will have at least learned a lot about yourself and your industry. Furthermore, you won’t have to live questioning what might have happened if you had just been willing to take the leap of faith.

Use Leverage

As a part of financial planning investing with leverage consists of using borrowed capital to achieve higher profits. For example, in order to invest in real estate, you may take out a loan to purchase a property so that you can rent it out. By getting a mortgage, you use borrowed money with the ultimate goal of getting a return on your investment in the future—the return is the profit you make in renting out the property. When investing in real estate, your cash flow from rental income is the most important source of real estate profit. Therefore, if you choose to invest in real estate, it’s important that you do everything you can to increase your cash flow.

Look for Undervalued Investments

When you are looking for investment opportunities—like in the stock market for example—the goal is to find stocks that are being priced below their intrinsic value. That way, when the stock prices increase, you can make a profit on the investment. These undervalued stocks are not common, but they do exist. To help you determine whether or not a company is being undervalued, you should look into things like their recent earnings calls, quarterly financial reports, and their historical stock performance.

At the end of the day, investing and financial planning is always a bit of a gamble. Nevertheless, it is a gamble worth taking. Minimize your risks by doing your research and cutting your losses early. Furthermore, diversify your risk portfolio by not putting everything in a single asset.

Read this next: Important Aspects of Your Retirement You Need to Plan Out

Contact Tenpath Financial Group for certified financial planning services.