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How do I Choose the Best Investment Companies?

By Carol Francois
Updated May 16, 2024
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To find the best investment companies, it is important to first decide what type of service you expect from an investment firm. There are three things that you need to do first: identify your goals, research the reputation and background of the company, and determine the type of relationship you want with the firm. Invest the time required to obtain this information because this process will help to clarify your expectations and improve your chance of success.

Your goals are the most important part of any investment decision. Choosing an investment company depends completely on what it is you want to achieve. Make a list of the three tasks that you want the firm to provide and look for a firm that meets your needs. Many people have common goals, and so the basic expectations are shared. Most people are looking to increase wealth, minimize loss, and capitalize on all opportunities.

Look at the companies' financial statements, marketing material and public trading records. Ask for references from companies that have investments with them. Review their performance over the last five years and how they performed when the market was up and down. Discuss their investment strategy, risk evaluation process and the size of their contingency fund.

In addition, invest the time to compare their results with other investment companies. The only way to rank a company is to compare it with other firms that are operating in the same markets and providing the same services. Look at the names of the top ten brokers and investigate their career path. It is not uncommon for brokers to switch between companies. Check the performance at both companies around the time of transfer.

The type of firm that you select must be able to meet your needs. The kind of relationship that you have with the firm determines the long term satisfaction you will have with them. You have two options: active and passive. Although your needs may change over time, your profile will remain the same.

Active investors like regular communication with their firm on new opportunities, stock trades and sales and overall performance. They want their broker to know their name and goals. Passive investors want regular reports on their account activity but are not interested in participating in the decision making process. Decide what type of investor you are and select a firm that specializes providing the type of service you want.

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Discussion Comments

By anon343753 — On Aug 02, 2013

I need an investor willing to invest in my invention for safety.

By comfyshoes — On Oct 30, 2010

Suntan12-Hedge funds invest in either venture capitalist firms which are new companies on the market that offer promising futures, or private equity in which larger businesses that may need capital because they are having financial problems at the moment.

These firms are well known companies that have a higher likelihood of future success. This is why the hedge fund manager will risk the capital on these types of companies.

Hedge funds however, require very high entry minimums. Most hedge funds require an initial investment of at least $1,000,000.

The hedge fund manager often earns about 20% of the profits and if they fund does not make money then, neither does the fund manager. The government does not regulate these funds and the fund manager does not have to disclose his or her fund strategy.

This makes these investments high risk, but high reward investments.

By suntan12 — On Oct 30, 2010

Mutsy-There are financial investment companies that look at small business investment companies which are considered equity investment companies.

These investment fund companies invest heavily in either venture capitalist firms or private investment companies. Usually hedge funds fall into this category.

By mutsy — On Oct 30, 2010

Subway11-I like financial investing companies like Vanguard or T Rowe Price. These online investment companies are discount brokers that offer great index funds with minimal expenses.

Expense ratios of .20% are not unheard of in many Vanguard funds. Index funds offer great diversity as they represent an entire index or sector of a market, while managed funds may bring about the same level of returns but you have to take the commission of the broker into consideration.

These funds are noted with a Shares A or B after the title of the fund. The Shares A fund requires a first year commission of about 5%. The Shares B offers an incremental commission each year until the 7th year of owning the fund. If you sell Shares A before a year or a Shares B before the 7th year, you will be hit immediately with the entire commission.

This is why I don’t invest in managed funds because when you factor the commission, you are left with a lower rate of return.

By subway11 — On Oct 30, 2010

There are many direct investment companies that offers the ability to purchase stock directly from them. Often these stocks allow the ability investments of just $10 at a time.

A newsletter called the Money Paper offers information regarding the participating companies and how you go about investing in these companies.

Many of these companies are fortune 500 companies like Mc Donald’s, Coke Cola, and Dell. It is a great way for children to invest in the stock market.

ince children typically receive a small amount for their allowance, it would be a fun way for them to understand the stock market while investing in their future.

The only drawback to this method of investing is that it takes about a week to sell your stock because it is done over the mail, so you can not take advantage of the immediate gains. These stock investment companies offer a great financial education for children.

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