Q:

What is a good investment?

A:

Quick Answer

A good investment manages risk by buying low and timing the market, states MarketWatch. A good investment is not the product, which can change with time, but the process of identifying the risk and managing it.

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Full Answer

Any product can be a good investment even when market conditions are not right if you have a strategy to minimize risk, claims Financial Mentor. Take for example the real estate market in 2008 and 2009. While property prices were falling, it was still possible to make a profit on an investment by purchasing foreclosures at marked down prices, such as 20 cents to every dollar. This strategy would have turned a real estate investment in a bad year into a good investment.

The key principle when picking a good investment is to focus on the process of identifying a product that lowers risk by timing the market, using a strategy that increases the returns or obtaining the product at a low valuation notes Financial Mentor. Focusing on a product such as real estate, tech stocks or bonds is not as beneficial as ensuring the process of selection of the product takes at least one of the three steps of timing, strategy and valuation into account.

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