Investments

Investment is a wealth generation activity which differs on the risk taking appetite and the time period. The best investor are those who invest in balanced portfolios and have exposure in all types of investments based on there need and the time period.There are several factors, which are related to the definition of bet investment plan. These are: Safety, return & Liquidity.

There are many types of Investment:

  • Short Term deposit
  • Bonds
  • Property
  • Shares
(1)SHORT TERM DEPOSIT

i).Bank Saving Account:
The simplest kind of short term (or cash) investment is a savings account. Returns are low compared to other investments, but returns are guaranteed by the bank - so your investment won't drop in value in the short term like others might. You can withdraw part or all of your money whenever you want (total liquidity)
ii).Bank Fixed Term Investment
You give the bank a lump sum for a set period (a fixed term) usually three, six or 12 months. Your money is locked away for the fixed term. In return, you get a higher interest rate than you could get in a straight savings account. You may be able to withdraw your money, but you will get a lower rate. These can be a good short or medium term investment, depending on interest rates.

(2) BONDS:
A bond is like an IOU issued by a government or a company. You give them money for a certain period, and they promise to pay a certain interest rate and re-pay you on maturity. Bonds lock your money away for a set period of time, but they can sometimes be traded.

3) Shares:
By investing in shares in a public company listed on a stock exchange you get the right to share in the future income and value of that company. Your return can come in two ways:

  • Dividends paid out of the profits made by the company.
  • Capital gains made because you're able at some time to sell your shares for more than you paid. Gains may reflect the fact that the company has grown or improved its performance or that the investment community sees that it has improved future prospects.

Of course shares can also lose value.
Any loss or gain in value is said to be 'realized' if you sell the shares right there and then. If you hold onto them the loss or gain is 'unrealized'.

(4) PROPERTY:
Your home is probably the biggest investment you'll make during your lifetime. When you plan for your retirement, you need to think about your retirement home as a non-financial asset. It gives you shelter and accommodation but not spending money.

Rental Property
Owning property rented to individuals or businesses can be a safe and profitable investment. Returns from property investment come from rental income, after deducting expenses, and from the increase in the value of property over time.
PENSION INVESTMENT
In many high-tax countries, much pension’s investment is partly or entirely insurance-based. This is due partly to the need to incorporate disability and death benefits into pension schemes (they are not suited to a fund-based approach except when the fund is very large), and partly to the favorable taxation environment of life assurance companies, in which many pension schemes grew up.

Mutual Funds
A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which in turn enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries, and the list goes on.
The primary advantage of a mutual fund is that you can invest your money without needing the time or the experience in choosing investments. To know more about mutual funds, please visit our learning centre.

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