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Diverse ways to make sound investments

Date Added: January 29, 2010 11:52:37 AM
Category: Bank And Financial Institutions
There are a lot of types of investment. Loosely, they are divided into four groups: short-term deposits, bonds, property, stocks. Within each asset group there are investments to suit diverse types of risk, duration, returns and liquidity. There are also different ways of investing. You can take the 'DIY' route and make an investment directly in one or more asset groups. Or, you can invest in a managed fund where specialists make a full scope of investment for you. 1. SHORT-TERM DEPOSITS A) Bank savings accounts The simplest kind of cash investment is a savings account. Returns on these investments are lower compared with other investments, but returns are guaranteed by the bank. Thus, your investment will not fall in value. You can withdraw a part or the whole sum whenever you want (total liquidity). B) Fixed term deposits You put an amount in a bank for a set period. In return, you receive a higher interest than you can get from a savings account. You can withdraw your money, but you will get a lower interest. 2. BONDS The government and firms issue bonds. You give them a sum for a fixed period of time, and they promise to pay a set interest and pay you off at maturity. Bonds lock your money away for a set term, but they can sometimes be traded. 3. PROPERTY Investments made in property can be very profitable, providing it is properly managed. Property investments can be direct and indirect. A) Direct property investment decisions If you have made a direct property investment, you can control the day-to-day management of your rental property yourself, or hire a property management company to do it for you. B) Indirect property investment In case of an indirect property investment, you can invest in a private superannuation investment pattern or managed investment fund that invests a part of your amount of money in property. This kind of indirect property investment also makes it easier for the average investor to receive the benefits from different types of investment. 4. STOCKS AND SHARES By investing in stocks of a company listed on a stock exchange you receive the right to share the future income and value of that business. The return comes either in the form of dividends or in the form of capital gains. Certainly, stocks and shares can also decrease in value. Remember to consult your financial consultant before making an investment.
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