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A small investor has four options to invest with varying risk. A small investor needs to understand his situation and invest for maximizing returns and minimizing risk.

Keeping your money in bank is less risky but offers poor returns, investing in stocks is risky but offers good returns if managed with some skills. Investment in forex can have the highest returns but has the highest risk attached to it.

A small investor with limited skills loses money 80% or more times in forex and should keep away from investing in forex. Adventurous small investors  should acquire skills before investing in forex. There are a few online forex websites that offer dummy accounts for beginners to get familiar with the software and improve their investment skills in forex.

Real estate investments need planning and should be considered if  you can park your funds for long term. The investment in a home is best if you can work out the monthly installment in the range of 20%-30% more than the monthly rentals.

The investment strategy criteria is always based on one financial situation and the risk capacity.

Stock market  offers a better returns potential  that are far better than many of the safe investments available in banks. A small investor should not put all the money in stocks nor in bank. Every investor has to decide his line for parking  his funds between bank deposits, stocks & forex.

For example an investment $1000 in the stock market or forex can bring many multiple times returns as compared to money in a bank (where interest can be really low).

Many people think that the stock market is risky. No doubt , there is an element of risk, and one  could  lose his investments. Stock investors  have to take the time to educate themselves and fine-tune their investment skills for getting much better returns on their capital than those who opt for 100% safe investments.

It’s also important to note that often, when one leaves their money in a bank, the real returns from the interest may not cover the cost of inflation – in such cases it’s possible to actually lose money in real terms because inflation is higher than the general interest received.

In fact, investing in the stock market offers something for every type of investor, from risk averse to those who are willing to take on calculated risks in order to achieve higher returns. Any small investor should take minimum risk matching his skill levels. Investing for smaller gains at a time is better than risking all your extra funds hoping for big gains.

When you deposit your money in a bank your capital is not really at risk – with stock market investment you run the risk of losing all the money that you invest if the stock goes bust. Also, while many analysts look at past performance of companies and markets we all know of the disclaimer that says “the past is not necessarily a guide to future performance” – in other words what has brought success before may not always bring success in the future. The market can be a real enigma at times.

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