Many people throughout history have made their fortunes through real estate. Arnold Schwarzenegger is a great example, but few people know that he made much of his early fortune off of real estate. Arnold Schwarzenegger used his financial gains from a mail order business and his bodybuilding competition winnings into his first real estate investment venture, which was an apartment building he bought for approximately ten thousand US dollars.
Some hear stories like that of Arnold Schwarzenegger and believe this can be repeated with the same results and success. However, real estate investment take much more planning, analysis and effort. It is not as simple as buying a property and spending a few thousand dollars to repair or remodel in the hopes of selling for a high percentage of profit. Furthermore, once a property is ready to be sold it would be best to sell by owner, thus the need to have real estate flyers and brochures, with various online (or print) advertisements. All this takes time, money, and effort, which are sometimes overlooked in the process.
An investor’s financial capital is occupied for the duration of buy to sell in real estate investment. This duration can be anywhere from weeks to months. In some cases, property values stay stagnant for years. An investor must ask if it is worth the return to tie up capital for such a long time. Investors always need to consider the opportunity cost of not having investment capital at hand when needed. For example, if the investment capital is locked into a property that at best case can return a profit of ten to twenty percent over a six-month period, then the investor loses the chance to invest in more lucrative opportunities. All this may sound like common sense, but many times it is overlooked when we come across a real estate opportunity that is a sure winner. Investors must also consider if their investment does not turn out to be the fast money making investment initially thought.
Any investment has some risk associated with the investment. There are much lower risk investments an investor can make to keep their capital safe, but the return on the initial investment is much lower and many times much longer duration. Currency exchange is an investment strategy that has an ‘adjustable’ risk, depending on how much margin used. Lowering the investment risk can be accomplished by investing in safe currencies and by using less margin. In currency exchange, margin is typically referred to the amount of money the broker allows the investor to use of its money. For example, a broker can offer fifty times the amount of money in a brokerage account. So, ten thousand US dollars in an account gives the investor fifty thousand US dollars of investment power. However, the more margin used the more likely to hit a margin call, which means liquidation of the investor’s financial assets to cover losses incurred.
Currency exchange keeps your financial investment liquid enough not to be locked into one investment, but also allows for an adjustable risk to profit ratio. Whichever route of investment is chosen, an investor must always consider what form of investment best fits their needs.