Today’s marketplace is competitive, especially as the traditional system takes a backseat to the global economy. Practices such as international money exchange, offshore investments, and outsourcing opportunities are constantly changing the financial landscape- some for the better, and others for the worse. But there are still opportunities, right?
In the recent past, most of us have turned to financial institutions, such as banks and credit unions, to manage our money. However, conventional investment opportunities are becoming outdated as distrust for lending institutions has grown alongside interest rates and bankruptcy filings. So, how do you know who to trust and where to invest your hard-earned money?
While most financial advisors are still pushing long-term investments, short-term are undoubtedly the most sought after- and with good reason. Investing a small amount of money in a short-term investment can produce a high-yield in just a short time, but it can also be a quick “game over” for the unprepared investor. That’s why we’ve prepared a few tips for the short-term investor; a bit of due diligence to help you avoid common mistakes and save you from losing your shirt.
Do Your Homework
An effective investment requires thorough research, including the collection of data concerning the market, the company and/or project you’re investing with, and the feasibility of that company and/or project being successful. Before you dive into an investment opportunity that looks “too good to be true”, remember that sometimes those opportunities are too good to be true.
One way that you can protect your investment is to research the company or project that you’re supporting. Make sure it is a reputable and legal operation, check reviews, and look for fraud alerts on the internet. Once you are sure everything is legit, make sure the opportunity is one that has a high chance of success and you’re on the right track.
Don’t Be a Hero
The global marketplace is crawling with innovative ideas, especially when it comes to technology. Crowdfunding has changed the way people view, find, and support projects however not every innovative project is a success. History repeats itself for a reason and sometimes, trending investments are short-lived.
Be wary of investment opportunities that claim to have a high-return in a short-period of time. They may have the possibility of yielding a high-return, but they also have the possibility of instant bankruptcy for the entrepreneur who has nothing to lose. And, you don’t want your investment listed on the bankruptcy roster.
Follow the Money
Where there is already a steady cash-flow, there is bound to be more. Of course, this is not always true and businesses do occasionally take a turn for the worst, but for the most part, a business with revolving capital and assets is less likely to take a dive. So, if you see a good investment opportunity with a stable company, chances are they are running a short-term campaign for a special project using your investment. This is a win-win situation because they want to fund something that they know will make money while you benefit from their success.
Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.