Last updated on May 23, 2024
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Define your criteria
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Research the market
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Evaluate the performance
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Assess the risk
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Diversify your portfolio
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Monitor and review
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Here’s what else to consider
Investing can be a rewarding way to grow your wealth and achieve your financial goals. But how do you find the best opportunities that match your risk appetite, return expectations, and time horizon? In this article, we will explore some strategies and tools that can help you identify potential investment opportunities in the context of financial management.
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- Marwa Abdelaziz Chairman -PDC GROUP INVESTMENTS
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- Laura Triplett SVP, Area Manager at Atlantic Coast Mortgage
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1 Define your criteria
The first step to finding investment opportunities is to define your criteria. What are you looking for in an investment? How much can you afford to invest? How long are you willing to wait for returns? How much risk are you comfortable with? These questions will help you narrow down your options and focus on the ones that suit your profile. You can also use your criteria to filter and screen potential investments based on various factors, such as industry, sector, size, growth, valuation, profitability, dividends, and so on.
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Well as a bottom-up investor, I try to get ideas from different sources. I look at the companies trading at 52-week low prices or have substantial movement in prices downwards or upwards. I then try to analyze whether the movement makes sense or not. I don't mind cloning the super investors if the selected equity makes sense. For that, I use DATAROMA to get insights into superinvestors' moves.
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- Laura Triplett SVP, Area Manager at Atlantic Coast Mortgage
If you are a beginner investor, “Pay” yourself first. Auto deduct your savings from your paycheck so it’s never in your hands to spend. Reward yourself when you hit milestones that you set in advance. Encourage others to invest which helps you hold yourself accountable to lead by example. Pick a person that you want to emulate as an investor and read everything that person did to increase their wealth and DO IT!
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- Jeff Hines Franchise consultant/ Business Strategy and Patient Advocate Medical Anti-Aging/Commerical Real Estate and Business Loans /
Join an investment club. The power of the many helps with opportunity of finding great deals that can be vetted by the group. Read the book by Benjamin Summers, The Shadow Bankers Secrets" which outlines the mathematical formulas to measure risk versus return. The goal of course is to minimize risk and to have a return that compensates for the level of risk.
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- Priyank Kothari Building My 2 Cents | Finance | Taxes | Strategy | Mutual Fund Distributor | ACMA | CFA all levels cleared | Kairos Fellow |
These are very relevant questions to begin with, all investment types are not suited for everyone. Horizon, ammount, purpose, target returns are key considerations.Then there is a factor to keep it realistic, you can't say that you want one day return to be 35% and hope your manager to find the right suitable asset for you.
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2 Research the market
The next step is to research the market and find out what is happening in the industries, sectors, and regions that interest you. You can use various sources of information, such as financial websites, newsletters, podcasts, blogs, reports, and magazines, to stay updated on the trends, opportunities, and challenges that affect your potential investments. You can also use tools like stock screeners, market indices, and ETFs to compare and analyze different investments based on their performance, fundamentals, and technical indicators.
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- Jeff Hines Franchise consultant/ Business Strategy and Patient Advocate Medical Anti-Aging/Commerical Real Estate and Business Loans /
Based on my experience, first analyze your passions, and then research those companies that fit your profile. Now when you are considering investing, how can you find companies worthy of your investment? I use the example of Anti-Aging. I was always interested in new technology, how can we reduce pain, make life more enjoyable from a physical standpoint. When you go to the shopping center, watch how people walk. You will be shocked, and I say this because I have watched, and so many people are walking as if they are in pain. So I am looking for investment opportunities to address this problem. I see huge demand, and limited supply of solutions, and of providers who offer solutions. That is the signal of a business opportunity.
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For every day economy news and listening to views of very high level CEO's / investment managers watching CNBC or Bloomberg on a daily basis may help starters to familiarize themselves with equity public markets. Analyzing stocks and valuations require very specific knowledge which may be daunting but looking at cash flow statements and understanding basic concepts of revenues vs expenses could prove helpful. If investors are interested in investing small amounts in commercial real estate, established, credible crowdsourcing company websites have actual deals and a lot of research to read.
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3 Evaluate the performance
The third step is to evaluate the performance of your potential investments and see how they have done in the past and how they are expected to do in the future. You can use various methods and metrics to assess the performance of your investments, such as return on investment (ROI), net present value (NPV), internal rate of return (IRR), payback period, cash flow analysis, and so on. You can also use tools like financial ratios, charts, and graphs to visualize and compare the performance of your investments based on their profitability, liquidity, solvency, efficiency, and growth.
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- Jeff Hines Franchise consultant/ Business Strategy and Patient Advocate Medical Anti-Aging/Commerical Real Estate and Business Loans /
Considering all the investment options, such as hiring a financial advisor, or trying to invest in the stock market on your own, or buying insurance annuities, or buying real estate and dealing with toilets and tenants, consider an Investment Club. What is your passion? For me, it is Medical technology, medical business. What is it for you? If you know of any investment clubs and what businesses they focus on, lets share that information. The goal is the power of the many, to avoid the losses you will encounter by trying to be an expert in everything, doing everything yourself.
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- Michael Taylor I help busy professionals make money trading UK stocks💡
PE ratios and FCF yields are great but at the end of the day as a trader I get paid by P&L.I can have the most undervalued stock in the world but if hasn't moved in 12 months then I've lost money.I want my capital to be efficient and so I rotate into new stocks once my targets have been hit. By taking on plenty of trades where the risk/reward is in my favour I minimise the risk of large losses through a single position.
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4 Assess the risk
The fourth step is to assess the risk of your potential investments and see how they are affected by various factors, such as market volatility, economic cycles, competition, regulation, and so on. You can use various methods and metrics to measure the risk of your investments, such as standard deviation, beta, alpha, Sharpe ratio, and so on. You can also use tools like scenario analysis, sensitivity analysis, and Monte Carlo simulation to estimate the range of possible outcomes and probabilities of your investments.
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- Priyank Kothari Building My 2 Cents | Finance | Taxes | Strategy | Mutual Fund Distributor | ACMA | CFA all levels cleared | Kairos Fellow |
Risk, "Investments are subject to market risk,Please read the offer document carefully before investing"You have heardcthis lets decode thisThere are many risks in the world of investing, everything can be right but something like covid can come in.So to assess these risks are very important and to keep yourself uptodate with events around the world is very important.You can do it via various tools as mentioned above but know no one is fully complete and you need to measure multiple risk factors.
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- Jeff Hines Franchise consultant/ Business Strategy and Patient Advocate Medical Anti-Aging/Commerical Real Estate and Business Loans /
Jeff HinesFranchise consultant/ Business Strategy and Patient Advocate Medical Anti-Aging/Oil & Gas Drilling Partnership / Asset Based Long Term Care solutions,For those looking to buy a business, using the absentee franchise model may be ideal. In fact, as an investor, you can purchase franchises that require no hands on management from you, and for oversight, the time requirements are minimal. This idea makes you an owner of a business that can be sold, or expanded, and gives you the flexibility of absentee ownership. You supply the capital, the franchisee supplies the business model, which has been proven, and the management expertise and you reap the rewards.
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5 Diversify your portfolio
The fifth step is to diversify your portfolio and spread your risk across different investments, industries, sectors, and regions. Diversification can help you reduce the impact of any single investment on your overall portfolio and increase your chances of achieving higher returns with lower volatility. You can use various methods and strategies to diversify your portfolio, such as asset allocation, rebalancing, correlation, and so on. You can also use tools like portfolio optimization, diversification score, and efficient frontier to optimize your portfolio based on your risk-return trade-off.
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- Marwa Abdelaziz Chairman -PDC GROUP INVESTMENTS
Fundamental Analysis: Evaluate the financial health, earnings potential, and management of companies or assets you're considering. Look at factors like P/E ratios, revenue growth, and debt levels.
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- Gail Villanueva, Founder Deal Architect, Real Estate Note Investor, Mobile Home Investor, Content Creator, Noteworthy Investments, LLC
I have been investing in real estate since 1980. I've worked in 5 different sectors of real estate careers--Realtor, buy & hold investing, rehabbing, wholesaling, and note investing. Diversity in real estate investing is paramount to your financial strength. For example, housing is at its utmost demand and supply cannot keep up. Because of that, I find alternative housing in which to cashflow that others may not find appealing. Housing values go in waves but always seems to recover. Rents are constantly on the rise. Rehabbers can optimize their portfolios by getting in and out of a project quickly. And then there's real estate note investing where you don't have to deal with tenants and the monthly cashflow is stable and constant.
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Investing in real estate demands patience and discipline. Discipline is crucial to stick to your investment strategy amidst emotions or market fluctuations. Post-acquisition, properties might take years to appreciate in value or yield significant rental income, requiring patience. Moreover, understanding real estate market cycles is key. A disciplined approach and patience are vital to navigate through the market dynamics ensuring long-term investment success.
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6 Monitor and review
The final step is to monitor and review your investments and see how they are performing over time and whether they are meeting your expectations and goals. You can use various tools and techniques to monitor and review your investments, such as dashboards, reports, alerts, and feedback. You can also use tools like benchmarks, performance attribution, and variance analysis to evaluate and compare your investments with other alternatives and peers. You can also use tools like audits, evaluations, and feedback to identify and address any issues, gaps, or opportunities for improvement in your investment process.
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- Ian Dempsey DipPFS Themoneyman | The Erling Haaland of IFA’s | Financial educator | Independent Financial Advice | Zero ego | Zero jargon | Public speaker | Mens mental health advocate and charity trustee |
This is the most important part of all. Advisers will review investments for you consistently or should do but it should extend much more than if your portfolio has gone up or down. What’s the comparable performance against the benchmark, other funds in the same category, same provider, different sectors, industry average and so many other factors. 6% return might seem good but if comparable funds are returning 8% it’s not so good.
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As suggested earlier, i monitor on a daily basis, especially, during volatile times, with an impending crisis looming.Any amount of caution is justified during the present and upcoming scenario.I watch the business news closely, looking for events which might further aggravate the already unstable global situation, because no one really knows from which source the next irritant may come which will tip the scales, the other way.I read the Economic Times every day . So i attempt to be alert and ready.
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7 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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- Adi Craciun
Start with clearly understanding your outcome. What do you want to achieve, and how fast? Investing is not all about money. How much time can you dedicate? What is your risk tolerance? What skills and knowledge do you have that can offset risk? What contacts do you have that can help you in a certain asset class? A good self-awareness of your personal circ*mstance will help you pick the best asset class and strategy where you have the most chance for success. Personally, I'm not an advocate of diversification, in the sense that if you really want to be good at something, you have to focus. I would stick to one strategy in one asset class until successful, and only then start in a different investment strategy.
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- Ron Chipkin REALTOR, Broker, GRI at Casa Realty
Consider partnering with a real estate professional who has personal experience with the type of investment in which you have interest. Start with just one, and have discussions with your real estate education in mind. Some learn better by doing.
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