Lump Sum Investment
If you have a good sized lump sum of money to invest you can have some wonderful conversations with dozens of specialists and each one of them will tell you what they think is the best option. Lump sum investment is something that many people spend hours day dreaming about, especially those who are employed in the financial sector. It is like a continuously changing puzzle and when it is someone else’s money at stake it is very easy to have all the answers. When it is your money, however, it all becomes a little more relevant and getting it wrong can be a disaster.
It would be wonderful to possess foresight as well as a lump sum of money. That would make you truly infallible. Unfortunately this is something that nobody can guarantee. The best plan for reliable lump sum investment is probably to invest in more than one scheme. There are a great many ways in which you can invest, including property, stocks and shares, gold, bonds… the list is endless.
Some people like to invest in gold. This can often be a good investment depending on the financial climate at the time of purchase. If you purchase when the economy is running well then you could easily be realising a high return if the country goes into recession. Again, though, it is not advisable to use this for your entire lump sum investment. Ten percent of your investment put into gold could work very well for you without it being risky. Cash investments can always work well and money invested into an ISA is a safe bet. You would probably not be able to invest all into one, however.
In general it is best to seek advice from a specialist. Once again, you are likely to hear differing advice but you will have to commit yourself to the plan which makes you feel the most confident. The majority of investment specialists would advise spreading your lump sum investment over cash/bonds, stocks and shares, commodities and property with probably the majority going into stocks. A real estate investment trust may be a sound idea for property. If you have a large lump sum you may consider putting a small percentage of it into high risk funds. These are always an interesting investment and can be great to keep an eye on and also, if you are lucky, tremendously profitable. Good advice is obviously necessary here as you will need some knowledge of emerging markets, hedge funds etc. These are not areas into which you should become involved personally if you have little or no knowledge. You would also be foolhardy to invest all your lump sum in such ventures.
Lump sum investment is a tricky business and you will need to weigh up the pros and cons of each option. It is never good business practice to put all your eggs in one basket when it comes to investment. The only advice that I can give is to do your homework before committing yourself, trust your own judgement when it comes to whom to listen to and, do not take your lump sum down to the race track!
By: Robert Grazian
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Filed under Investing by on Jul 7th, 2010. 