Investing in savings
Where and how to invest your money? This question is always timely, because no one wants his or her money to be idle on the financial markets, whether it’s a crisis bullet or aoss.
The financial market gives you plenty of opportunities to invest your money – from safe bank deposits to complex derivatives that allow you to invest on „credit”. Today I am presenting 3 main investment product groups, grouped according to the risk of loss.
How to start investing?
Your decision to choose a product for your savings should be preceded by the basic question:”What loss am I prepared for? I accept the fact that I can lose 10% of my money, or maybe any loss is not an option? The answer to this question should be directed towards choosing a mix of investment products from 3 groups, which I am presenting below.
Secure, i. e. deposits, accounts and…
If you do not accept any losses for your savings, then you should choose the products that provide a guarantee of return on capital at the end of the investment’s life.
(a) bank deposits, (b) savings accounts, (c) investment policies
For the latter, you should be careful, because on bonds, if you want to sell them on the secondary market before maturity, you may lose a bond price during the term of the bond depends on interest rates – if they grow, then the value of your bonds decreases; the same applies to an investment in bond funds.
A little risk, more profit
If you accept a situation in which your savings may be worth several or more than a dozen percent, you can choose different investment products than those described in section 1.
You can choose between:
(a) Investment funds for sustainable growth
(b) Sustainable sustainable growth investment funds
(c) structured deposits
(d) immovable property
At the price of a higher risk of loss, you get the opportunity to earn much more money than on a bank deposit. In the times of boom, real estate made it possible for some to earn several dozen percent a year, and the funds of stable growth or balanced, not the most risky ones, brought also several dozen or in some cases even several dozen percent per year.
However, if deposits or accounts can be used successfully for the ongoing management of your money (blocking ad hoc surpluses), then in the above mentioned products, you should invest within a time horizon of at least several months.
There are no winnings without risk
Even if you are playing a totollotte, you risk it. You have a few million USD to win. Similarly in financial investments – if you want to earn much more, you must also risk a greater possible loss of your savings. If you want to earn several dozen percent per annum, then potentially you need to be prepared for this loss in parallel.
If you want to invest risky (remember that you can only place a part of your savings in this way, without risking your total assets) you have the following to choose: e) Equity funds, f) Commodity funds, g) Stock market-investment directly in equities, h) Foreign exchange market, i) Derivatives (share futures and other instruments, options)
Potential loss in risky investments: up to 100% of the invested capital
The basic principle: diversification, i. e. investing your savings in several products. Even if you are buying shares or investment funds, do not invest all your savings in one company or fund. Buy several companies of different size (liquidity) and sectors. In this way you will reduce (but not completely eliminate) the risk of loss.
What are investment funds: