Stocks,
equities and indeed any financial interest in a business are
of course investment opportunities intended to bring a return
considerably in excess of what the investor would have earned
from a typical interest account. It is the pursuit of this enhanced
dividend that inspires the investor to take a chance, believing
as he or she does that the particular commodity or product involved
has a bright future thereby bringing investment opportunities
in its wake.
One particular type
of initiative that has become popular in recent years is angel
investment, whereby a person who has capital to commit will
provide the necessary financial support to a new business to
enable it to start up, in exchange either for a share in that
business or for a return which will include a generous mark-up
once it has become established. The success or otherwise of
such a venture will depend entirely upon the investor’s
ability to correctly access its potential in the market.
A more cautious investor
may not be inclined to take a gamble by speculating on the future
in such a way, and may seek instead to protect his or her capital
even if it means a more modest return is expected. The simplest
means of achieving this is to place one’s capital into
a high-interest account such as an ISA, or in a guaranteed returns
investment of whatever kind. Another way in which any risks
can be minimised is by spreading one’s investment portfolio
in such a way as to offer protection from the failure of one
or even a small number of them. Although this does not guarantee
against making a loss it does make it much more unlikely to
happen.