I am commonly asked the question, “What is the best investment?”
My usual answer is that all legitimate investments are good. However, the best investment is the one that is suitable for us. To demonstrate, equities may provide high returns; but they are not exactly suitable to the retiree who just wants a steady stream of income from interest earnings.
There is a tendency to focus on returns that investments can potentially pay out before there is even an assessment of what money will be used for. We must remember that investments are mere tools and not ends in themselves.
Focusing on returns leads to greed and eventually financial (not to mention spiritual) loss. Sometimes, this focus on returns even leads to loving investments, a sure path to disappointment because investments never return the love. At times, investments don’t even provide the returns.
And if focusing on returns is an unnecessary thing, so too is ranking investments. Just like with any competition, the best performing investment cannot forever stay on top. Again, the better approach is to determine the level of returns needed given our goals, time horizon, starting funds and possible additional contributions to those funds. The resulting return can then be used to find that investment that can approximate such a return in a sustainable fashion.
Look at what the Bible says:
“Those who want to be rich are falling into temptation and into a trap and into many foolish and harmful desires, which plunge them into ruin and destruction. For the love of money is the root of all evils, and some people in their desire for it have strayed from the faith and have pierced themselves with many pains.” 1 Timothy 6:9-10
So, let us not love investments for they will never love us back. Loving investments is the kind of love that only exists on a one-way street that leads to the lonely highway.
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(Originally written by Efren Ll. Cruz, RFP at http://www.savingstips.com.ph)
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