| There are a lot of forms of investment. Generally, they are categorized into 4 groups: short-term deposits, bonds, property, stocks and shares. Within each asset category there are investments to suit various forms of investment risk, duration, returns and liquidity. There are also different ways of investing. You can decide on the 'do-it-on your own' scheme and invest directly in one or more asset groups. Or, you can make an investment in a managed investment fund where specialists make a full scope of investment for you.
1. SHORT-TERM DEPOSITS
A) BANK SAVINGS ACCOUNT
A savings account is the simplest form of cash investment. Returns are lower in comparison to other investments, but returns are guaranteed by the bank. A part of the whole sum can be withdrawn whenever you need (total liquidity).
B) BANK FIXED TERM DEPOSITS
You put a sum of money in a bank for a specified period. In return, you get a higher interest rate than you could get from a savings account. If you withdraw your money, the interest rate will be lower.
2. BONDS
Bonds are issued by the government or a business. You give them money for a certain period of time, and they promise to pay a set interest and repay you at maturity. Though bonds lock your money away for a set term, they can be at times traded.
3. PROPERTY
Property investments can be profitable, provided that it is well managed. There are both direct and indirect investments.
A) DIRECT PROPERTY INVESTMENT
If you are interested in a direct property investment, you can control the day-to-day management of your rental property yourself, or hire a property management firm to do it for you.
B) INDIRECT PROPERTY INVESTMENT
For an indirect property investment, you can invest in a private superannuation scheme or managed fund that invests a part of your 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 public business listed on a stock exchange you receive the right to share the future income and value of that firm. The return comes either in the form of dividends or capital gains. Certainly, stocks and shares can also drop in value.
Before making an investment, consult your financial consultant. |
