| There are many types of investment. Generally, they are divided into four groups: short-term deposits, bonds, property, shares. Within each asset class there are investments to suit diverse forms of risk, duration, returns and liquidity. There are also different ways of investing. You can take the 'do-it-on your own' pattern and make an investment directly in one or more asset classes. Or, you can make an investment in a managed fund where financiers make a wide scope of investment for you.
1. SHORT-TERM DEPOSITS
A) Savings accounts
The simplest kind of cash investment is a savings account. Returns are lower in comparison with other investments, but returns are guaranteed by the bank. You can withdraw a part or the whole amount whenever you wish (total liquidity).
B) Bank fixed term deposits
You put an amount in a bank for a fixed period of time. In return, you get a higher interest than you could get from a savings account. You can withdraw your money, but you will get a lower interest.
2. BONDS
Bonds are issued by the government or a firm. You give them money for a set term, and they promise to pay a specified interest and pay you off at maturity. Though bonds lock your money away for a set period, they can be at times traded.
3. PROPERTY
Investing in property can be very profitable, provided that it is properly managed. There are both direct and indirect investments.
A) Direct property investment
If you want to make a direct property investment, you can control the everyday management of your property yourself, or hire a property management corporation to do it for you. A property management corporation takes on the tasks of finding tenants, collecting the rent etc. Charges for these services are typically a percentage of the rental income.
B) Indirect property investment
In case of an indirect property investment, you can invest in a private superannuation scheme or managed fund that invests a part of your sum in property. This form of investment also makes it simpler for the average investor to get the benefits from different types of investment.
4. STOCKS AND SHARES
By investing in stocks of a public company listed on a stock exchange you receive the right to share the future income and value of that company. The return can come either in the form of dividends or in the form of capital gains. Surely, shares can also go down in value.
Remember to consult your financial consultant before making an investment. |
