Investing is about using your money to build wealth. And investments are more than just saving money – they’re
about building wealth for the long-term security of you and your family, including planning for your retirement.
How much money do you need to invest?
Well that depends on the purpose of your investments and therefore how
much money you need. You may be investing your college eduction for your children, or investing for retirement.
As with all financial goals, the key is knowing what your real target is and then working out how to achieve it –
and whether your budget can afford it!
The important thing is to be informed about investments and understand the risk attached to them – ALL investments have a risk, but some are riskier than others.
So what can you invest
Now that you understand the basics, let’s look at options for investments.
any of the above options for investments interest you, seek appropriate advice before committing your hard earned cash.
- Cash and commodities – Cash is the most common form of investment. You put money in a bank account, and the bank pays you
interest. This is low risk, but low return. Talk to your bank about options – long terms deposits can give you a better
interest rate, but will have restrictions on access to your money and maybe even minimum deposits.
You can also
invest in Commodities such as Gold bullion. Gold is a limited resource, hence its value is always maintained and is not subject
the fluctuations of the foreign exchange rate. Gold is a good long-term, low risk (and low return) investment.
- Property – the old ‘bricks and mortar’ is still seen as a good solid investment option that works on the principle
of capital growth.
- The Stockmarket – shares and stocks produce wealth from capital growth and in the form of a dividend payment. Some investors (called
day traders} buy and sell shares on a daily basis to make the most of daily peaks and lows on the share price – this
can be risky, but can also give high returns.
Most mum and dad investors purchase shares for the long term, making
the most of long-term capital gain and reinvesting the annual dividend payments back into the shares.
the stockmarket is a jungle full of snakes and lions – so don’t go in unprepared! Get advice from a reputable
stockbroker and diversify!
- Bonds – investors raising money for a company may sell bonds, whereby they promise to repay you the bond amount plus a guaranteed
interest on maturity.
- Managed or mutual funds – if you’re not sure what you want to do, a managed fund from a reputable finance institution can be a good option,
offering moderate returns and moderate risk. The Financial Institution will have a range of packages available – ranging
form low risk/ low return to high risk/ high return – so there is usually something for everyone.