Before investing your money in stocks, bonds, collectibles, forex, mutual funds or any other forms of investment you should know how to calculate the ROI (Return on investment) so that you can make informed decisions on your investment and remain successful. You should choose your investment portfolio by analyzing how much ROI you can expect from it. There are some general guidelines which you can follow to enhance the ROI of your investments.
Choosing Equities over Securities and Bonds:
The equity market has always shown to generate more profit when compared to bonds and securities despite the high fluctuations in stock market. While there is high risk on equities when compared to bonds, you can choose a mixture of both to diversify your portfolio and gain decent profits. Based on statistical data from the year 1926-2010, it has been noted that investing in government bonds has guaranteed a 5.5% ROI while investing in large company stocks and equities have returned as high as 9.9% ROI on the investment.
Choosing the Right stocks:
When you consider investing in stock it has been found that always value companies provide more ROI when compared to growth companies. The stock price of Growth companies is generally high when compared to their accounting measures like earning, sales and book value. But their payouts on dividend are less and the returns are also not as good as value companies whose stock price is low when compared to their earnings and sales. Also the dividend payouts of value companies are much higher and this will guarantee higher ROI for the investors. Also many investors prefer to purchase stocks of only reputed and international companies rather than small companies. But based on statistical data, small companies have generated more profits than larger companies with high capitalization. Though small companies are not well-established and pose higher risk, they can generate more profits since the operational cost is less and shareholders are also small in number. So it’s always good to invest to small cap companies than purchase stocks of large capitalization companies. Choosing the right stocks is an important step for improving your investment returns.
Diversifying the portfolio and analyzing market trends:
If you want to improve your investment ROI, you should learn to diversify your product portfolio and invest in various options like binary options, commodities, stocks and Indices, forex currencies, collectibles etc. This will help in minimizing the risk and enhancing your returns. Commodities and futures trading is also a profitable investment in long term and require very less market knowledge. Also if you want to increase your profit you should understand the market trends and use fundamental and technical analysis to find the right investment points.
Investing in Binary Options:
Binary options or digital options are one of the recent investment techniques that guarantee higher ROI when compared to other methods of investment. With binary options you can get up to 85% returns on your investment even if you are right only 50% of the time. Binary options have simple risk/reward profiles and you can make money by predicting the price fluctuations of stocks, forex currencies, commodities like gold and silver etc. If the underlying stock or commodity is in the money during expiry time, you will get as much as 85% returns on your investment. You can gain higher profit by trading binary options using reliable trading platforms. When trading using binary options, you should follow certain investment strategies by making use of technical indicators such as pivot points, candle-stick charts, Stochastic Oscillator, Commodity Channel Index (CCI), graphs and other charts which indicate market trends.