Investment Doesn’t Have to Be Low and Slow

Posted: 4th November 2015 11:54

Investment circles are frequent in the use of crock pot metaphors. “Set it and forget it”. “Low and Slow”. These and other old-fashioned sayings are tailor made to describe investment strategies that pay off over years and decades. Investment approaches like these are so ubiquitously recommended that many people think this is the only way to invest. But there are subtle variations on standard (and non-standard) investment strategy, and there are as many of these as there are people with investment portfolios.
For people who can’t afford to wait around for decades, there is good news and bad news. While long term investments take forever to pay off, they present a lower risk than quicker investment forms. It’s very difficult to find a low-risk, high return investment that doesn’t take eons to mature. But what most people don’t consider about long term investments is that they are passive. This brings us back to the crock pot analogy. Crock pots are easy to use, and the meals one makes in them don’t require a lot of skill.
It’s the same with index mutual funds and ETFs. These are a great product for people who don’t want to have to maintain their investments. These are among the most reliable ways to make money on the stock market, without having to exert almost any thought or energy. That doesn’t make them a bad choice. Investors of all kinds still use these products. But it also means that there might just be other kinds of investments that grow because of investor skill, not because of the chance fluctuations of mindless markets.
One notable alternative to the set-it-and-forget-it model is emerging on the internet today. Forex trading is a kind of short term investment which allows for big growth in as little as minutes. While this inherently means that there is great risk involved, where Forex differs from investment models like index mutual funds is in the skill involved with which great Forex traders succeed. For those unfamiliar, the most central Forex format is the trading of currencies. While investors don’t own the underlying currencies, their investment is tied to how one of many currency pairs changes in value over time. If the value changes according to the investor’s prediction, the investor gets money based on how much money was invested and how much the value changed in the anticipated direction.
The key element is skill. Because investors can learn about the currencies they are investing in, they can learn the trends which exist surrounding any given currency. Currencies change in value for specific reasons. Many of these are geopolitical, and these can be observed from without to give the investor an educated guess about the way the currency will change in value in the near future. This makes Forex a remarkable investment alternative to standard models like index mutual funds, which require both large initial investment sums as well as large amounts of time to pay off in a significant way. Forex requires neither.