by Marcus Bentley Wise

Created on: April 13, 2010   Last Updated: April 15, 2010

To invest in anything is to take a view that what you are purchasing today will be worth more in the future. This means that when you sell it you will have made money and not lost money. The only problem with that is that no one can actually guaranty that that is what will happen. Like any investment there is an element of risk. And that is that you might not get back what you have put in.

The stock market is the largest investment opportunity open to most people who have the funds to invest. And historically it has a record of out performing all other kinds of investments across the board. But that is as long as you look at the long term and not the short term. And this is not just the steadily increasing values of the stock. You also have an income that cane gained when a dividends is paid out. For long term gains over a period of time that stock market has a historical record of good solid performance that can be tracked.

The trick is knowing what to do and when. And that can be a difficult thing to get right. That is when you need to have the knowledge in place so that you can make the right decision. And that is a problem for most of us. If you are going to invest you want a balance of two things. One, as much security as you can get to protect you investment. And secondly the best return on the money that you invest. That is what you want but to get one you might have to forgo the other.

That is why if you are going to invest for any kind of wealth creation you need to insure that you get a regular income and take chances so you can get maximum rewards. So to do this you need to devise a plan and set out your investments in a way that you are happy with.

Put fifty percent into the good solid company that you see in the top 100 or 500 companies. Look for the one with a good track record that has been in the top for a number of years. What you want is a sold investment that will give you steady growth and a good dividend.

Put thirty percent in to more diverse stocks. Look for new companies that look like that might be up and coming. A company that have research and development in to new product that could make a lot of money quickly. Look for the old company that is falling and undergoing restructuring. For this you do not want any thing to off the wall or out there. You want some thing that looks like it will pick up. Invest in them and watch them. Here you are not looking for a dividend but growth of actual share price.

Finally, put your last twenty percent in to a high risk stock. Look to get in at the ground flour and watch it rise. Set a limit so that you are happy you have made the profit that you want to get out of it. And then get out. It might still go up and up when you have got out but that is the risk you take. If it goes down you will tell yourself you are a financial genius and congratulate yourself.

This kind of diversity across a spectrum of stock will give you a better chance of getting over all growth on your investments. You might not be happy with the fifty, thirty, twenty split and just want to go only five in high risk. For you it might only be worth going fifty high risk and fifth low risk. That is down to the individual and what they are happy doing.

But in the long term over all the stock market is the best investment that you can make as it stands today. And if you are investing hopefully tomorrow as well.

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