Some investors may say, “If you find something that works, stick with it.” This mentality can often add undue risk to your investments. This behavior causes the investor to add larger and larger portions of their account to their high return investments. Eventually, those high return investments will become overbought, and they may come crashing back down. By finding multiple areas of success you can find a smoother climb in your investment account while still getting market breaking returns.
High Return Stocks
If you can find a method of high return investing using individual stocks or buying penny stocks you may not only find incredible returns, but you may also get a career managing other people’s money.
Choosing individual high yield stocks is difficult, but certainly not impossible. The best choices for high returns have typically been either finding hidden gems of companies that are doing everything right, but who are relatively unheard of, or by investing in the rule makers, which are the giant companies that dominate their market and who produce a high return investment for decades.
High Return Mutual Funds
For mutual funds I prefer to take advice from my personal broker. There is a lot of information to know about mutual funds including the funding family average return, the money manager’s average returns; even the head of research returns are often tracked. By finding a broker who earns a portion of your total account value instead of a flat fee you’ll find a broker who really wants you to succeed.
High Interest Investments
In order to earn high interest on a loan you have to either loan to a person who is high risk or a person who has a really high need for the money quickly. Otherwise that person would just go find a lower interest rate elsewhere. I prefer to loan to people who are high need. They tend to be working on their own high return investments and need a little extra cash flow to carry them through their project.
I’ve had success with hard money lending to real estate developers. These projects almost always cost a little more than expected and take a little longer than expected. By lending enough money to finish the project you can often charge a 3% fee of the total loan plus as much as 30% APR interest. These loans tend to be short term because as soon as the project is finished the investor will cash out, but if you can keep finding people to take these loans you can earn really well. Plus, if you treat these borrowers well they will begin to depend on you for all of their short term needs.
High Risk High Return Investments
A few high risk investments sprinkled in with the others is not a bad thing. They can add an extra boost to your returns, often while everything else is doing well also. Highly leveraged investment vehicles work really well for this. Options are my favorite because they trend really well with the underlying stock that I’m already familiar pricing. Some people prefer commodities because of the volatility and common sense (though very complicated) factors that impact the pricing. The sector that allows the most leverage for the average investor is the FOREX. Normal people can get 200:1 margin accounts to begin trading currencies.
If all of these individual leveraged investment options of high return investments scare you the ultimate high return funds are hedge funds. The hedge fund managers are paid huge salaries along with their highly compensated staff members to exploit every opportunity existing in every market imaginable. Generally, you have to be a “high worth” investor to put any money to hedge funds, but the pay scale and performance driven bonuses bring in the best talent._____________________________________