How to Spot a Bad Investment (and a Good One) from a Mile Away

Reading time: minute(s)

One of the most important things you can do to build your wealth is learn how to invest your money well. This skill is one that sets apart wildly successful business people and those that don’t reach their fullest potential.

When you can invest your money wisely, you can watch it grow and increase your profit without having to take on extra work. This leaves you free to live your dream lifestyle and give you time to spend with your family, friends and hobbies.

That’s exactly why I do what I do. When I learned how investing my money the right way could help me grow my income in a way no other career could, I was hooked.

My story goes like this. I was determined to replace my full time income and then to build residual income through my direct selling business. My goal was to take my business profits and invest in real estate income properties. Once I realized the power of leverage, I knew it was possible and the results are proof that it works. I now have numerous properties and a network marketing business throughout North America. This combination is providing my freedom lifestyle, but also a solid financial portfolio for the future.

These tips will help you separate bad investments from good ones.

Bad Investments Don’t Allow for Due Diligence

First, a bad investment will be hard to find information on. You’ll find the company isn’t very transparent or there aren’t many happy investors around. If you can find information, but it seems too good to be true, you could also be looking at a bad investment.

Good Investments have Positive Evidence

On the other hand, good investments will lead to positive evidence when you do your due diligence. You’ll find a business with a good reputation, a record of making money and clear documentation of successes and strategies.

Bad Investments Lack Leadership and Strategy

If you can’t figure out who is leading a business or what exactly its strategy is, you probably shouldn’t invest. Bad investments lack direction and leadership and are often floundering around without making much of a profit.

Good Investments Include Focused Plans

A sign of a good investment is that it has focused plans for success. There is a strategy you can understand and that makes sense for the business, market and financials involved. As a potential investor, you should be able to get answers to questions about leadership, business plans and development goals.

Bad Investments make it Hard to get a Return

Another sure sign of a bad investment is that it is hard to get a return out of. If it requires excessive amounts of time, money and risks, the investment probably isn’t a good one. These kinds of investments are the ones that can be especially damaging to investors who put money into them and then don’t see a return any time soon, and unfortunately, sometimes never at all.

Good Investments have a Clear Path to a High Return

But, a good investment will have a clear path to a high return. Its strategy will be sound and it will include plans for how you will get your money back. Make sure these plans seem realistic and that you are comfortable with the time it will take to start seeing a profit. But, if there is a good path to a high return, you’re probably looking at a good investment opportunity.

Bad Investments feel Questionable

Trust your gut. If an investment feels shady or like a scam, it probably is. Meet the people involved and get a feel for the way they do business and the way they treat their investors and money. If you feel uncomfortable with any part of the opportunity or the way it is set up, don’t invest.

Good Investments are Honest Deals

If the investment feels honest and the leaders have a track record of making money and dealing honestly and well with investors, colleagues and customers, the investment is worth considering.

In the end, the best way to make sure you are making a good investment is to do your due diligence. As a business coach, I am a huge proponent of the idea that you should know what you are getting into and how you can succeed before you start investing money. In fact, my newest book is a due diligence guide for network marketers.

When done well, financial investments can lead to large returns, helping you increase your income and make more while working less.

If you’re interested in learning more about doing your due diligence or how to invest wisely, contact me.

About the author 

Deborah MacDonald

After almost 25 years as an entrepreneur, I continue to grow my business, my passive income streams and my wealth. And now I mentor others on their wealth journeys by teaching them how to fund their own freedom lifestyle.

7 Secrets To Achieving Your
Dream Lifestyle