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High Yield Investing And The Forex |
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Submitted by Dillon Mosher
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Investing in Forex is probably more risky but there is the opportunity to make more
in a shorter space of time.
By high yield we mean, high yield consistent with the preservation of the capital invested. This definition means that investment in a new corporation that is just starting out is omitted as is investment in partnerships as a partner and in individual proprietorships whether they be shoe shine parlors or stock brokerage firms.
This latter type of investment does not stress the preservation of your capital down to the last dollar right from the time that dollar is invested. Granted it may work out wonderfully, and a dollar invested may conceivably grow to two or five or even $100, but when funds are invested in such a way they are spent for sales promotion or for a truck or machinery or for anything. Your dollar or fund of dollars thus cannot be returned since it has been put into forms of assets which it is hoped will start earning and eventually build up a fund of dollars to return to the investors.
We are talking about investments which right from the day you invest your money have as goals the preservation of every dollar and the payment of a return on that dollar. As soon as the investment is made, wheels are started rolling to return your investment to you. There is no particular virtue in this type investment as against the kind that takes your funds and puts them into a peanut stand which you and your partner will operate.
It is simply a different type of investment. If you put your funds into a building and loan association you know with reasonable certainty that they will be returned to you, and it is one of the main purposes of the association to keep your money intact at all times.
Besides the preservation of your fund of dollars, which will eventually be returned to you, the type investment we are talking about is the kind that gives you a high yield on your money, and by high yield is meant anything over the savings bank 3% or thereabouts, up to 20% and in some cases higher.
Quite aside from the fact that we are simply taking a type or types of investment and studying these, there is very real merit to concentrating on what we call high yield investments. In a free enterprise a democratic economy such as we have in the United States the factors of production are guided into their most valuable use by going where they are offered the greatest reward or return.
The laborer goes where he is paid the most; the executive moves out of his job with his company and into a higher paying one in another company; a farm is excavated away and in its place is constructed a modern shopping center; and capital goes where the users are willing to pay the most for it, provided the risk is approximately the same.
In the railroad building era which started in the 1830's the smart, large aggregations of capital went into constructing new rail lines and buying new equipment, and the return on the capital in this employment was high. Since those pioneering years the railroads have matured and gradually new forms of transportation have come in as competitors, mainly trucks, airlines and bus lines. The railroads now need little capital for expansion and thus are unwilling to pay a high rate of return to attract it.
In the early and middle 1950's mobile homes (house trailers) were just developing as a full fledged industry, and to attract money this industry was willing to pay a substantial rate of return. Later in the 1950's this business approached a plateau of development, at least a temporary one, and it could not pay the rate of return it once did. In 1959 and 1960 and into 1961 still another industry came up, and came up fast, and it was willing to pay a high rate of return in order to attract capital shell or pre-cut homes, manufactured in parts at the factory and shipped knocked down to the owner's land where they were assembled quickly and easily.
The industry was new. It needed funds to develop. Since it was new and in its early stage of great demand, its profits enabled it to pay a healthy rate of return on the money it needed.
If you invest in stocks or Forex make sure you do not risk more than you can afford to lose.
If you invest in Forex you will find software will help you tremendously.
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