Financial Investing Concepts – Creating Superior Returns

Posted by super on January 23, 2016 in Investments |

One of the most potent financial investing concepts is the idea of fast cycle investments and SOR or speed of returns. An institutional investor typically has a large capital account to protect and are therefore very prudent with there investing decisions. They typically hope for nothing more than 10% to 20% annual return. But private investors are a totally different breed of animal and can invest with fleet footed accuracy.

The fundamental principle of investing is to balance the elements of risk and return. The first and most obvious consideration in any investment is… will the funds invested be returned or lost. The likelihood of a return is in direct proportion to the investors degree and extent of loss of control of the value of their money. Think about it, if you put $10,000 into Google stock, or any other stock, you literally have no control. You can do one of two things, sell or keep your stock.

This is a very blunt control instrument and you literally have no say in how the share price behaves after you have purchased stock for example. Of course with stock, you have a very low risk that you won’t get all or most of your capital back because the fluctuations are so small on a daily basis, which also unfortunately means your returns may not be very impressive if you do get a positive result.

 

Now consider an investment where you have spent your money but you have and can exert direct control over the value of your investment. This particular element is crucial to wealth production. If you can dictate to a certain degree what the actual value of your investment will be after you have purchased, well of course you will make sure it increases. Any tangible object whose value can be directly affected falls within this category. A house, a car, luxury boats or jewelry, anything tangible that can be purchased below value and improved and resold for retail price or higher.

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