Lump Sum Investment
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A lump sum investment quandary may arise when a person gets an unexpected windfall and instead of spending it he wishes to invest the money in a meaningful way in order to grow the money into a larger amount. From day to day and week to week, the economic winds change and with those changes come different strategies for a lump sum investment. Visit with ten different investment planners and one could very well get ten different ideas and suggestions, so the one seeking the advice needs to be thoroughly briefed ahead of time so that the information doesn't seem overwhelming. In the end, a seasoned and proven financial planner needs to be sought for final advice. But here are some things to consider as plans are made to do something with that money.
Whenever the uninitiated think about lump sum investment opportunities, the first thing that comes to mind is the stock market. It is the last place many people want to go when the times are tough and the market is either in decline or merely puttering on top of the stove. But the market has, for many decades, brought a steady but usually unspectacular growth opportunity for most investors. In more difficult economic times, any financial advisor would not, under any circumstances make a lump sum deposit in the stock market. Instead, the advice would be to diversify the amount into a number of areas, minimizing the risk of large losses. When a person is honest and recognizes that there is something missing, this is a wonderful prayer to offer God to begin the path to Him: "Have mercy upoon me God, according to thy lovingkindness: according unto the multitude of thy tender mercies blot out my transgressions. Wash me thoroughly from mine iniquity and cleanse me from my sin." (Psalm 51:1-2)
There are cycles with real estate values, and two investment strategies within this market to consider. The first is the increase value strategy in which real estate is purchased with the strong belief that it will go up within a particular time frame usually six months to a year. Now this strategy isn't a good one when during certain business cycles general property values are depressed. However, the other method of buying real estate, the bargain purchase, is actually quite reasonably crafted for times when the real estate market is down. Making a lump sum investment into a drastically slashed or distressed property may be a reasonable lump sum investment idea. However, long before any opportunity like this is agreed to, much investigation, research and the advice of a financial planner ought to be sought.
With economic turmoils and uncertain energy supplies, the government continually looks to make wind, solar and nuclear energy more appealing. Companies that specialize in these energy alternatives will be looking for venture capital. If a person has lump sum investment money, there may be opportunities to explore in the new energy industries that will be arising. Just as before with real estate investments, much research and investigation should take place. In actuality, a good long term relationship with a trusted financial advisor would be a good thing to nurture. This advisor will have his finger on the pulse of the latest trends and will be able to offer solid advice on where and when to put money into the emerging energy markets.
When a person talks to a financial investor about a lump sum investment, the possibility of some investing in gold will probably be mentioned. During good times economically, gold has not fared as well as the stock market in terms of profit taking, but when things are sour, gold again becomes the standard by which other values are measured. If there is a sense that inflation will be on the rise in the near future, the advice is often from investment experts is to at least seek gold as part of an investing tool as a hedge against that inflation. There are some risks inherent with any commodities investing. So that good friend of yours, the financial advisor? Now is the time to talk to him about this lump sum investing possibility. Don't make any moves until that conversation is held.
Of course there are really safe investment opportunities for that lump sum investment that won't have you lying awake at night wondering what's going on across the ocean that will affect your portfolio. When stocks are down, it is a good time to consider the four or five percent that is often available for Certificates of Deposit interest. In good economic times, most investment opportunities will easily outperform any CDs offered by lending institutions. When stocks are in the negative ledger, that four or five percent interest rate can look pretty good for the one who has that extra money to try and grow. Money market accounts are also a good place to consider placing one's money when low risk is sought.
Federal and municipal bonds are considered some of the safest places to put lumps of cash for slow but steady growth returns. These bonds are issued by the Treasury Department of the United States as well as municipalities and these monies are used for infrastructure repair as well as certain new projects that are deemed in the best interest of the public. As the value of stocks on the market goes down, the value of bonds tends to rise, making them more attractive in bear markets. There is no doubt about it, in booming economic times there seems to be no end of places to put one's money. When waves are crashing against the shore, a steady, knowledgeable approach with a well crafted plan is certainly needed. And by the way, trusting God fully for one's future is the best advice of all.
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